DDA Sends Parking Increase to Council

Ann Arbor Downtown Development Authority (Feb. 4, 2009): “Let’s plunge into the most controversial part,” declared Roger Hewitt, chair of the DDA board’s operations committee, at Wednesday’s meeting of the full board. The controversial part was a resolution to increase parking rates in downtown Ann Arbor, starting July 1, 2009, which represented a delay compared with the originally planned schedule. After plunging in, the board voted to approve the rate increase schedule and sent it along to city council. Council will review it at its Feb. 17 meeting – along with the site plan for the Fifth Avenue underground parking garage, which the parking rate increase will help fund.

In other business, the DDA board approved its 2009-10 and 2010-11 budgets, approved a management incentive for Republic Parking, and received updates on a variety of ongoing projects and initiatives. As part of his monthly update from the Downtown Area Citizens Advisory Council, Ray Detter alerted the DDA board to an apparently downward trend in the quality of the property management for residents of Courthouse Square.

Parking Rates To Rise But Not Until July 2009

Background: At its November meeting, the DDA board approved a schedule of parking rate increases that would have seen hourly parking in structures rise from its current rate 80 cents an hour to $1 starting Feb. 1, 2009, then to $1.10 in FY 2010-11 and $1.20 in 2011-12. Rates for monthly permits, hourly lots and at meters would have seen stepped increases on the same time schedule.

The DDA then was asked by the Main Street Area Association to consider delaying the proposed schedule of increases by one year, which would have seen the parking rates start to rise in January 2010 – on the same sequence of stepped increases. At its January 2009 meeting, the board contemplated a resolution that would have done just that: implemented rate increases beginning January 2010. That resolution was tabled.

This past Wednesday, the board considered (and passed) a resolution different from either of the two previous proposals. It calls for the rate increase to start on July 1, 2009, but with stepped increases smaller than previously proposed. On this most recent proposal, in July of this year, the hourly parking in structures would climb from 80 cents an hour to 90 cents, then to $1 the following year, and then to $1.10 in 2012.

Public Commentary on Parking Rate Increases: During public commentary, the board heard from two downtown merchants who spoke against raising parking rates in the current climate.

Susan Adams: Adams is store manager of Ten Thousand Villages. She recounted a conversation she’d had with Maura Thomson, executive director of the Main Street Area Association, about the need to do more for customers, and to deepen the relationships with customers in a climate of lower consumer confidence. In that conversation, the DDA’s motion to delay parking increases arose. That prompted Adams to share her perspective as manager of a store that is run by predominantly volunteer staff. “The people who work for me give their time,” and with the proposed parking rate increases, Adams said, it would “cost them more to work for free.” Because they carried “want” items, not “need” items, she said, now is not the time to raise parking rates. It had a negative impact on the social climate of downtown, she said.

Elaborating on what “social climate” means, Adams explained that in Birmingham, Mich., where she lives, parking is free for 2 hours in all structures. Visitors to Birmingham can afford to pay for their own parking, Adams said, but the result of free parking was a welcoming social climate, a vibrant atmosphere, and the free 2 hour parking strategy had resulted in overall raised parking revenues. She concluded by saying it’s a little shocking that we’re thinking about raising parking revenues.

Rebecca Konieczny: Konieczny owns Busy Hands on Main Street. She said that she was speaking for herself and some of her retail neighbors. She appreciated that the DDA takes actions in contrast with other entities that just talk and talk without doing anything, and she appreciated that the DDA stayed focused on its mission: to promote a healthy downtown. She said that she felt like they agreed that if you solve the parking problem, you solve many other problems. Downtown, she said, is not an exclusive club, it’s inclusive, most people feel welcome and safe, it’s not limited by mobility or transportation. She said she really believed that the new underground garage structure will be great, and would  make it possible to think about a convention center and a hotel.

Last year, Konieczny said she’d had only a small decrease in business, but some of her retail neighbors had had high double-digit decreases. She asked that people keep in mind the fragility of some businesses. She said that she wasn’t saying the city should never raise parking rates, but right now it would send the wrong message to residents and visitors of downtown Ann Arbor as unwelcoming.

Board Deliberations on Parking Rate Increases: Board member Roger Hewitt began deliberations on the resolution by acknowledging that there is concern about raising parking rates. He reviewed the basic DDA strategy with the parking system, which is that parking pays for itself: it’s the people who park who pay for it.

Referring to the proposed Fifth Avenue underground parking garage – which city council will discuss at its Feb. 17 meeting, along with the parking rate increase – Hewitt pointed out that building parking spaces underground to expand the parking system is very expensive. But the advantage of building underground, said Hewitt, is that the area on top of the structure can be developed, which yields increased TIF revenues that in the longer term could balance off the additional expense.

In order to expand the system, Hewitt said, they need to increase rates. Based on the way the DDA has organized its finances, there’s no other way to do it besides a rate increase. He said they’d looked at delaying the increase, but that what they’d heard from Tom Crawford, chief financial officer for the city of Ann Arbor, was that the DDA needed to have adequate funds to handle increased bond payments. Hewitt noted that the rate increase plan would borrow $2 million from the TIF (tax increment financing) fund [that's a reduction from the $3.6 million that would have been borrowed from that fund, had the rate increase been delayed until January 2010]. Further, the delayed rate increase plan would call for borrowing around $1 million from the parking maintenance fund.

Mayor John Hieftje, who also sits on the DDA board, noted that the city of Ann Arbor has a good bond rating, but it’s important that there be a revenue stream for it to continue, and that’s why a parking rate increase is vital. Looking at the $2 million that would be borrowed from TIF, Hieftje asked what’s going to be affected. “What’s coming up that may not be funded?” he asked.

Hewitt’s answer: nothing. The Fifth and Division project is included in the projections, said Hewitt, along with the various grants for the wayfinding project, the barrier-free curb-cuts, installation of LED streetlights – all the things the board has already passed. While the TIF fund balance would go down to just under $2 million in 2011, a balance would still be maintained in the fund, even while doing the current projects.

As far as other new projects, the board and staff are at capacity, said Hewitt, and it’d be 3-4 years before additional projects could be planned and executed.

Hieftje asked about implications for parking maintenance, if money was to be borrowed from that fund. Hewitt said that inspections had just been completed, and projections for maintenance over the next 20 years had been made. The bulk of the money, Hewitt said, would be used in years 10-20. “You’re making it sound like this is free money,” replied Hieftje.

Hewitt put the rate increase in the context of the overall parking revenues. The parking system takes in $14 million a year, so with a 10% increase (which is roughly what’s being proposed in the first year of higher rates), it translates to an additional $1.4 million a year. A small increase, concluded Hewitt, can lead to a significant amounts of dollars, and that is why the rates are intended to stay flat after this round of increases: fund balances would accumulate to levels that were too high.

Board member Russ Collins framed the discussion by saying that up to this point, the DDA had been able to take on community projects and initiatives based on the fact that its funds were unencumbered. By committing to the new underground parking garage and other proejcts, said Collins, the DDA had set its future for a significant amount of time. That’s different from the last five years, but not wrong. Collins characterized the DDA’s job over the next five years as being the construction manager of projects it had already agreed to. But Collins said that the DDA board needed to keep their ears and eyes open for the next opportunities after “this pig makes it through the python.”

Board member Leah Gunn expressed a mild objection to the pig and python analogy, saying she was proud of the DDA’s record, in paying for $50 million in parking structure repairs and replacement through parking revenues. She also cited the system of preventive maintenance that had been put in place, which included procedures as simple as washing them down two times a year.

Board member John Mouat said he thought it was critical how the rate increase was communicated to the community and that its delay to July 1 was one thing to focus on.

Hewitt reiterated the need for more parking capacity downtown, saying that during peak times, he personally has a hard time finding parking at the Maynard Street structure. They need to increase the capacity of the system, he said, because currently they cannot promise parking availability. He noted that 2.5 million square feet had been built downtown with virtually no parking capacity added.

Board member Keith Orr echoed Mouat’s sentiment that the message about the increase is important: it’s a delay. In fact, said Orr, it’s a $2 million commitment to delaying. Orr said  that the most important thing about parking is availability. As far as the message, said Orr, they should emphasize the delay.

Board chair Jennifer Hall said she had a very hard time supporting a delay, saying that the DDA’s ability to respond to possible project needs over the next two years would be compromised. Two of the projects the DDA was working on, Hall said, were not planned by the DDA but were responded to: (i) curb cuts to meet legal requirements for accessibility, and (ii) installation of LED street lights when city council was looking at creation of a special lighting district that would have created a tax for street light improvements. The reason the DDA was able to respond, said Hall, was because the DDA had a fund balance at the time. “I’m not comfortable with these financial constraints,” Hall said.

Board member Gary Boren asked Hewitt if the committee looked at delaying now, but with a more aggressive rate increase in future years so that revenues could catch up. Hewitt said that the operations committee was responding to the idea that the significant early rate increases would be bad and that it would be better to have smaller regular increases than one big increase. “Can’t we tweak that?” asked Boren.

Hewitt said that if they did a big jump early, they’d end up with too much money once they go out past five years – to which Hieftje quickly replied, “So then you lower the rates!”

Hewitt then characterized the proposal as “spreading the pain” – the business community wants the rate increases delayed, while the city’s CFO [Tom Crawford] wants larger rates earlier.

Gunn followed up Hewitt’s thoughts by characterizing the proposal as having achieved a delicate balance: “We’ve delayed, but not as long as they want.” It’s the best balance, Gunn said, that the DDA could offer.

Collins said he was in total agreement with Gunn’s remarks, declared that everybody’s equally unhappy, which was the definition of a compromise, and thus took the opportunity to call the question [a procedural move, which essentially translates as "Let's vote now."]. The board voted to honor Collins’ request for a vote, which they did.

Outcome: Resolution to increase parking rates starting in July 2009 was approved with dissent from Hieftje and Hall.

Lease Agreement with City:  DDA Budget for 2009-10 and 2010-11

Most of the discussion by the DDA board of the budget for the next two fiscal years centered on payments to the city for lease of parking meters. In the 2009-10 budget there is an item for a payment from the parking fund (063) to the city of Ann Arbor for $2,780,368 – which drops to $803,779 in 2010-11. However, the 2010-11 budget includes a contingency in the amount of $2 million. Hewitt said that the contingency was there in response to the prospect of discussions with the city that would unfold about the parking meter lease agreement. In his comments later, Hieftje said that he appreciated the way Hewitt had phrased it.

Here’s some background on the phrasing. At its Jan. 20 meeting, city council passed a resolution to revisit the existing agreement between the city of Ann Arbor and the DDA concerning the lease for space metered parking. As The Chronicle reported: “A second item involved a call for the DDA to begin discussions of the parking agreement on metered parking between the DDA and the city. The word ‘discussions’ was a replacement for ‘negotiations’ in the original wording. It was approved.”

“We don’t know where those discussions will lead,” said Hewitt. To which Gunn quipped, “Yes, we do!” Hewitt continued wryly, “Lacking such information at this time …” The future discussions with the city, said Hewitt, made it important to record a contingency in the 2010-11 budget. Hieftje, for his part, said that he thought Hewitt’s “ability to forecast the future” was probably “right on.”

Board chair Hall took pains to emphasize that the contingency was “a placeholder.” The amount should not be perceived by anyone, said Hall, as reflecting a final, done deal, but rather a starting place for the discussion.

[The original lease agreement between the city and the DDA to operate the parking system dates back to 1992. It was renewed in 2002, and adjusted in 2005 to increase DDA payments to the city. As one "whereas" clause put it in 2005, the rationale for the increase was "The City is facing a funding crisis and has asked the DDA to significantly increase its payments under this Agreement in order to help the City address this crisis."]

Farmers Market Renovations: Rescinding of Grant

As part of a planned renovation to the Farmers Market, the DDA had previously authorized a grant in the amount of $296,300. But in light of a decision by the city council at its last meeting to table the project, the DDA board voted to rescind the grant, but took care to emphasize that this was tied to the city’s tabling of the project and did not in any way reflect a lack of support for the project by the DDA.

Hieftje teased Leah Gunn, who serves on the county’s board of commissioners, by saying that she was part of the reason the project was tabled. He was alluding to the hire by Washtenaw County Parks & Recreation Department of the city’s park planner who would have managed the Farmers Market renovation: Jeff Deering Dehring, who worked his last day for the city on Jan. 30. This leaves the city of Ann Arbor with one park planner, Amy Kuras, who has inherited all of Deering’s projects while the position is vacant.

Year-End Management Incentive for Republic Parking

Republic Parking operates the parking system for the DDA in an arrangment where the DDA pays for expenses involved in running the system, plus $150,000 for providing services. In addition to those amounts, the contract specifies an additional $50,000 that can be awarded as a bonus. Last year, the amount awarded was $40,000. The board considered a resolution for a a bonus of $45,000. Hewitt cited significant new demands for the parking demand management system as partial reasons for the bonus. Republic now had two IT staff on board, and had experienced a turnover at the general manager and operations manager position without interruption in quality of service.

Hieftje said that while he thought Republic does a great job, with current economic conditions, now is not the time to hand out a bonus.

Board member Gary Boren said that when he first joined the board, the cultural practice of the bonus mystified him, characterizing it as “an expected tip” at the end of the year. He said he still didn’t understand it. Hewitt said the discretionary amount was previously greater and had been changed to the fixed fee plus a discretionary amount. DDA staff has argued for retaining some discretion, Hewitt said, so that the DDA could have some clout.

Gunn had praise for Republic Parking’s performance: “They’ve never said, ‘No we can’t do that!’” Gunn acknowledged that it’s a tip, but said that it goes to the local management. Board member Joan Lowenstein said that while it’s a tip, it’s something that’s contracted for.

Mouat asked what Republic Parking had done that counted as “above and beyond,” suggesting that review of plans for the new parking structure could qualify. Joe Morehouse, deputy director of the DDA, said that it’s hard to evaluate the “above and beyond” because the DDA pays Republic’s cost. Overtime, for example, is paid. Boren noted, though, that management is not hourly, so their overtime is not paid. Adrian Iraola, of Washtenaw Engineering Co., who manages many of the DDA’s projects, offered anecdotal evidence of Republic’s efficiency: While moving equipment, a gate at a parking structure dropped onto a trailer and broke, but within 5 minutes, the gate had been replaced.

After hearing praise from around the table for Republic Parking, Hieftje reiterated that he wasn’t saying anything negative about Republic Parking. But he said that this is a bonus to management, and it doesn’t filter down. He pointed out that city employees are also asked to do more and more as a part of their jobs and that in the current economic climate, he didn’t think bonuses were appropriate.

Outcome: The resolution to award a $45,000 bonus was approved, with Boren and Hieftje dissenting.

Courthouse Square

Courthouse Square is a housing development for seniors in a high-rise building on Fourth Avenue directly adjacent to the Fourth & Washington parking structure. Ray Detter, president of the Downtown Area Citizens Advisory Council, gave his usual update from the meeting, but in the interest of time [public speakers have four minutes], focused on reports he’d received on deteriorating conditions in the Courthouse Square building.

Detter read an email from an anonymous resident, which highlighted concerns for resident security and referenced a recent drunken stabbing in the building. It also addressed basic maintenance not being performed by the building’s owner: “In addition, Centrum is not maintaining the building. Upholstery is filthy. Panels are missing from the cover over parking. Windows, which early on were washed annually, have not been touched in years.” Detter indicated that he would be continuing to attempt to contact the vice president of First Centrum, the creator of Courthouse Square, a development which had been financed using tax credits.

Hieftje said that he’d been receiving anonymous letters for several months and that the city has done everything as far as enforcing building code. Hieftje said it’s unfortunate that there’s not better oversight, but that the city’s power is limited because it’s private property. “We inspect it more than any building in town,” he said. He noted that the city’s inspectors report that conditions there are not as bad as the anonymous letters depict.

Hieftje said that in the past, he’d used his bully pulpit to speak with the company. One worry, he said, is that the corporation wanted to drive the residents out, so that they can sell the building.

Dexter-Ann Arbor Run

Hal Wolfe, in his third year as race director of the Dexter-Ann Arbor Run, spoke to the DDA board during public commentary about  a range of frustrations he’d experienced, from parking issues to responsiveness from Skyline High School. He emphasized that the run helped promote the Taste of Ann Arbor and was a benefit to the downtown. He said that last year the route had been altered due to construction on Huron River Drive, but that the construction had not begun until after the run. The finish line had been re-located to Skyline High School.  Wolfe said that his five attempts to contact the principal at the high school had resulted in zero replies.

Wolfe’s frustrations extended to his attempts to coordinate with Republic Parking on the use of spaces at the Ann Street structure (critical to a downtown finish line and as a staging area), which he said needed to depend on more than just luck. He found it difficult to reconcile the city’s requirement that residents be notified of the upcoming street closures, with the inability to contact the owners of 12 key parking spots at the structure. Wolfe said that two main sponsors had dropped out this year. Wolfe ran out of time before he was able to pitch a sponsorship to the board.

Other Committee News

Operations Committee: From the operations committee, Hewitt gave an update on some parking demand management pilot projects, including valet parking at the Maynard Street structure. Morehouse said that the use of the valet parking seemed to correlate with the indicated spaces available on the electronic signs outside the structures. The day of highest use, which showed a dramatic spike, was attributed to a University of Michigan event.

Hewitt also asked fellow board members to begin thinking about a draft of a policy he’d provided that would specify that the cost of a development to remove an on-street metered parking space would be $45,000.

Partnerships Committee: Sandi Smith reported that that they’d been working with Dave Konkle, formerly the energy coordinator with the city of Ann Arbor, on applications for energy audits. Five were now complete.

Smith described a request from the DDA for housing funds to rehabilitate units it was acquiring in connection with Washtenaw Affordable Housing Corp. (WAHC). Avalon figured to spend $10 million rehabbing units. Smith said that the partnerships committee had asked Avalon to bundle its requests together, instead of presenting them as smaller individual proposals, and that Avalon had complied by making a $900,000 request. The committee had responded to the request by asking for more information, including the distance from downtown of the various projects.

Smith also reported that the pieces of masking tape visible on the walls near the ceilings marked potential spots for the camera mounts, which would be used to televise DDA board meetings – not live, but for tape-delayed airing on CTN.

Capital Improvements Committee: John Splitt gave an update on the Fifth Avenue parking structure project, reporting that they were dealing with a fire hydrant issue. They’d met with DTE and AT&T twice with another meeting scheduled and were currently doing geotechnical evaluations – i.e., drilling test bores as in the lead photo of this article.

They’re looking at the design to ensure maximum flexibility for punch-outs for expansion and building above the structure.

For the Fifth & Division street project, the design firm of Beckett and Raeder is continuing its work. MDOT is expected to give news next month on a $1 million grant request for that project .

The wayfinding project (signs indicating for visitors where key sites are) should result in signs getting installed “someday soon.”

Transportation Committee: John Mouat reported on a presentation the committee had been given by Sue Gott, Jim Kosteva and Dave Miller of the University of Michigan on transit, parking, bicycle, and pedestrian strategies used by UM. These included the subsidized services, (M-Card, blue bus service), 82 van pools ( which are subsidized at a 75% rate), and Chelsea-A2 express service (subsidized at 50%).

Mouat said that the UM bus station at North University Avenue, for which UM is asking the DDA for $50,000, is still in its early stages. Mouat said that it’s not just about the bus facility itself, but also about communication of information at the location in the form of an electronic kiosk.

Mouat said that the discussion of recommendations from Nancy Shore of the getDowntown program for use of $100,000 had been given short shrift due to the length of the UM presentation.

In connection with transportation, board member Joan Lowenstein reported that at Commute Chat, a regular event of getDowntown, representatives of the AATA had said that they’ve taken to heart the suggestion to improve signage for The LINK and are working on designs that will show, at each stop, what time the LINK is supposed to arrive at that stop.

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

Absent: Rene Greff

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