As The Chronicle previously reported, at last week’s city council meeting, Ann Arbor CFO Tom Crawford announced that bonds for the 677-space South Fifth Avenue underground parking garage had been sold on Aug. 5.
And on Friday, Aug. 7, the Downtown Development Authority’s capital improvements committee conducted interviews with four candidate companies for the job of construction manager of the garage.
Then, by Wednesday morning of this week, references and financials for the Christman Company had checked out to the satisfaction of the DDA staff and Carl Walker – the design firm that’s been hired for the project. DDA executive director Susan Pollay is working out a time for a special meeting of the whole board to award the job to Christman.
But the day before, on Aug. 11, a lawsuit in connection with the parking garage project – which had previously been threatened by the Great Lakes Environmental Law Center – was actually filed. The complaint alleges violations of the Michigan Environmental Protection Act, the Michigan Open Meetings Act, as well as nuisance and trespass violations. Herb David Guitar Studio and Jerusalem Garden restaurant are plaintiffs in the suit, along with GLELC.
On Wednesday morning, after arriving at a consensus that they wanted the Christman Company as their construction manager for pre-construction services, several DDA capital improvement committee members wanted to know: “When do we get the money?” That is, when does the bond money arrive so that they can pay Christman?
The money is coming from municipal bonds. And it’s supposed to arrive next week (on Aug. 19), Tom Crawford told The Chronicle in a phone conversation. It’ll be a wire transfer for roughly $49 million. Here’s a brief historical sketch of the bonds.
The municipal bonds for the proposed underground parking garage were first authorized by Ann Arbor’s city council at its Feb. 17, 2009 meeting – that’s a key date with respect to the lawsuit that’s been filed. Then at its July 20 meeting, the council authorized a change from tax-free bonds to taxable municipal bonds, which have higher interest rates, thus costing the city more in debt service. That’s more than offset, however, by money from the federal stimulus package through its Build America Bonds program.
In his presentation to the DDA board at its July 3 meeting, Crawford said that switching to the BABs would actually save around a $1.5 million over the life of the bond.
At the council’s most recent meeting, on Aug. 6, Mike Anglin (Ward 5) queried Crawford about the city’s bond rating in light of a $5 million payment out of cash reserves, which was needed to finance the early-out police retirements. Crawford told Anglin that the cash reserves were still within the policy range of 8-12% of expenditures, and that the city’s bond rating had been confirmed the previous day at Aa2 when the bonds for the parking garage had been sold.
So the bond sale date was Aug. 5. How exactly are bonds sold? There’s a bidding process. In this case the “sale date” corresponds to the deadline for submitting sealed bids. From the city’s Preliminary Official Statement for the issuance of the bonds:
Sealed bids for the purchase of the issue of bonds described below of the aggregate par value of $49,420,000 to be issued by the City of Ann Arbor, Washtenaw County, Michigan (“City”), will be received by the undersigned at the office of the Treasurer, at 100 N. Fifth Ave. Ann Arbor, Michigan
48107, until 11:30 o’clock, A.M., Eastern Daylight Time, on Wednesday, the 5th day of August, 2009, at which time and place such bids will be publicly opened and read.
Delivery of the bonds is scheduled for Aug. 19. After delivery, the city would receive a wire transfer of around $49 million, which would be invested in low-risk financial instruments – like U.S. Treasury bonds – in a manner that would allow those investments to be cashed out in the course of the project. That way, when the DDA requests funds to meet its construction payment obligations, those funds will be available.
When we spoke with Crawford, we asked him explicitly not to factor in any possible implications of the lawsuit on what might happen to the bonds – from Crawford we wanted to know how things worked in a garden-variety case. In a usual course of events, after the “sale,” Crawford told The Chronicle, “We’re in, we’re done.”
However, based on the Preliminary Official Statement, it appears that delivery of the bonds might founder on the need to attest that there is no pending litigation:
DELIVERY OF BONDS: The City will furnish bonds ready for execution at its expense. Bonds will be delivered at the principal office of the Bond Registrar, or any other place mutually agreeable, at the expense of the City. The usual closing documents, including a certificate that no litigation is pending affecting the issuance of the bonds [emphasis added], will be delivered at the time of delivery of the bonds. If the bonds are not tendered for delivery by twelve o’clock noon, Eastern Daylight Time, on the 45th day following the date of sale, or the first business day thereafter if said 45th day is not a business day, the successful bidder may on that day, or any time thereafter until delivery of the bonds, withdraw its proposal by serving written notice of cancellation on the undersigned, in which event the City shall promptly return the good faith deposit.
The lawsuit filed by GLELC alleges Open Meeting Act violations at the Feb. 17 meeting when the bonds were issued.
If the lawsuit delays bond delivery, that would delay construction start. And based on the construction manager interviews, delays in the construction start could potentially wreck the timing of crucial phases of the project.
The DDA board’s capital improvements committee interviewed four candidate construction companies from around noon to 7 p.m. last Friday in a meeting open to the public.
We’re Going to Dig a Big Hole
At least two companies for the construction manager job had taken to heart an apparent message from the DDA about timing: Get Fifth Avenue back open in time for the Art Fairs.
Timing of closure and opening of Fifth Avenue was a key part of presentations from Barton Malow and Christman Company – we missed Spence Brothers, and Granger Construction Company’s pitches. Those four had been winnowed down from 14 companies that submitted bids.
Barton Malow described digging the big hole from west to east. Christman had an idea for digging from east to west. They both talked about the project in terms that pretty much anybody could understand. Barton Malow, whose construction trailers can currently be seen parked on the north end of Michigan Stadium in connection with the university project, described the process like this: “We’re going to dig a hole – a big hole. And we’re going to fill it with concrete – a lot of concrete.” For their part, Christman described starting the excavation then “chasing ourselves around the hole with our concrete.”
The presentation was by no means just a bunch of concrete guys pouring out homespun phrases. It was a bunch of concrete guys with 3-D renderings of the site and their proposed phasing of the construction to take place in the tight quarters on the library lot.
Both companies had put effort not just into 3-D modeling, but into getting to know their potential client. Christman met with councilmembers. Barton Malow attended DDA board and city council meetings – at the interviews, The Chronicle had noticed the face of Neal Morton of Barton Malow, which had grown familiar from some of those meetings. Morton had also put time into measuring current light levels (in foot candles) and noise levels (in decibels) at the site so that they’d know what kind of comparative impact the construction was having.
Morton’s effort, however, was ultimately not rewarded with a recommendation to the board that his company be selected as construction manager.
Still, Barton Malow and 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.
Why Christman is the Committee’s Choice for the Job
At Wednesday’s meeting of the DDA’s capital improvements committee, Mike Ortlieb of Carl Walker reported that they’d followed up with six different references for Christman: the cities of Lansing, East Lansing, and Traverse City; Foote Hospital, Catalyst Development, and Spectrum Hospital.
They heard back from four of them. There was “not a negative word in any of them,” said Ortlieb. What had been particularly impressive was the fine job of coordination on any issues that had come up. It was their people who really made the difference, he reported.
The financial picture for Christman had also checked out. Adrian Iraola of Park Avenue Consultants, who’ll be coordinating with the construction manager for the DDA, said that Joe Morehouse, deputy director of the DDA, had cross-referenced the financial statements. Asked by board member Roger Hewitt if they’d looked at an audit, DDA executive director Susan Pollay indicated that Christman’s numbers had been checked using an online service from Dun & Bradstreet Inc.
But for Hewitt and other capital improvement committee members, what made Christman rise above the other three was the fact that they just recently completed three simultaneous projects of the same kind as the underground parking project planned in downtown Ann Arbor – they’d worked on the Michigan Street Development project in Grand Rapids. Plus, they’d be bringing that same project team to Ann Arbor.
Recently-elected board chair John Splitt placed a high enough value on the people on the project team that he said he’d like it written into the contract that if Christman were selected to handle the actual construction phase – the current award for the job is just the pre-construction phase – then he wanted that same project team in place.
Recently-appointed board member Newcombe Clark noted there was an interesting parallel between Christman as a construction company with its own “in house” concrete division, and Christman as a construction company that is also affiliated with its own development company: Christman Capital Development Company. As previously noted, the DDA wants its construction manager to solicit sealed bids for subcontracted work – the construction company’s “in house” concrete division won’t have any advantage against other bidders.
In the same way, Clark said, it’d be important that Christman as a development company not have any advantage in an RFP (request for proposals) process for the question of what, if anything, gets built on top of the underground parking structure.
The question of “what goes on top” was a contentious one at city council’s July 6 meeting when the council ultimately passed a resolution to set an RFP process into motion for how the top of the parking garage would be developed.
It’s possible, even likely, that alterations in the parking garage design might need to be undertaken on the fly during construction to accommodate plans for what goes on top. So, during the interviews last Friday, Carl Luckenbach of Luckenbach|Ziegelman Architects, who’s on the design team, asked candidates how well-equipped they might be to deal with such design revisions.
At Wednesday’s capital improvement committee meeting, Hewitt emphasized that “no RFP would come from us [the DDA]!”
The Lawsuit Against the City of Ann Arbor
Recall that references were checked for Christman, the construction company recommended by the DDA’s capital improvements committee for the construction manager job. Of those, Mike Ortlieb indicated that one was a neighbor to the Grand Rapids street improvement project that Christman had worked on, directly across the street from the site.
In Ann Arbor, it’s two immediate neighbors to the Fifth Avenue construction site – Herb David Guitar Studios and Jerusalem Garden restaurant – who are parties to the lawsuit filed on Aug. 11 against the city of Ann Arbor.
The first count of the suit’s claim is one of nuisance:
86. The City’s proposed Parking Garage project will cause vibrations, noise and dust, creating a nuisance that will cause damage to, and interfere with the businesses, of Plaintiffs Herb David Guitar Studio and Jerusalem Garden.
The second count of the suit’s claim is one of trespass:
94. If the Parking Garage project is permitted to go forward, vibrations, noise and dust from the construction process will physically invade the Plaintiffs’ properties.
95. The vibrations, noise and dust which will enter, settle upon and physically invade Plaintiffs’ properties will interfere with Plaintiffs’ use and possession of their properties and will constitute a continuing trespass upon Plaintiffs’ properties.
96. Plaintiffs do not consent to having vibrations, noise and dust physically invade their land and property.
Three: FOIA Violation
The third count of the suit’s claim is that the city of Ann Arbor violated the Freedom of Information Act in failing to provide documents that the Great Lakes Environmental Law Center had requested under that act:
108. The City has failed to meet its burden of claiming an exemption because FOIA exemptions must be supported by substantial justification and explanation, not merely conclusory assertions.
109. The City withheld email communications among Council members concerning whether to postpone a decision on the Parking Garage resolution which is clearly a matter of urgent public interest. These communications do not fall within any of the exemptions to FOIA claimed by the City.
In part, GLELC became aware of the failure of the city to provide responsive documents through a FOIA request made by The Chronicle:
69. Upon information and belief, much of the material exempted from GLELC’s FOIA requests were disclosed as part of a similar FOIA request submitted by The Ann Arbor Chronicle.
Four: Open Meetings Act Violation
The FOIA violation claimed in the third count of the suit is a key element related the fourth count, which is a claim that the Open Meetings Act was violated at the Feb. 17 meeting of the city council:
122. The Open Meetings Act requires that all decisions and deliberations of a public body shall be made at a meeting open to the public. MCL 15.263
123. The City violated the Open Meetings Act when City Council members discussed and decided not to postpone a vote on the resolution to approve the Parking Garage project through private email communication.
124. After the private email discussion among Council members, Council voted to approve the site plan for the new Parking Garage and the bonding to finance the project.
Paragraph 54 (b) of the complaint indicates the specific councilmembers, whose email exchanges during the Feb. 17 meeting are alleged to constitute a violation of the Open Meetings Act, are Carsten Hohnke, Sandi Smith, Margie Teall, Leigh Greden, Marcia Higgins and Sabra Briere. In The Chronicle’s set of emails, we identify only one email involving Briere, which was sent to her and Smith by Higgins at 8:27 p.m. with an empty body and the subject line: “I won’t be asking for a postponement.” To the extent that GLELC wants to make a quorum-based argument that a meeting took place that was not properly noticed, it may depend on demonstrating that Briere looked at that email during the meeting.
As a part of that OMA count, the suit states that because of the FOIA violation, GLELC did not become aware of the OMA violation until long after it occurred:
126. In response to GLELC’s FOIA request, the City refused to provide the email communications between Council members regarding postponement of the vote on the resolution to approve the Parking Garage.
127. As a result of the City’s failure to comply with FOIA, Plaintiffs did not become aware of the private emails and the City’s violation of the Open Meetings Act until on or about July 9, 2009.
Five: Violation of MEPA
The details of the claimed violation of the Michigan Environmental Protection Act are discussed more fully in a previous Chronicle article. From the complaint:
148. The proposed Parking Garage will “pollute, impair and destroy” the natural resources in several respects, including, but not limited to, the following:
(a) The Parking Garage will increase motor vehicle miles traveled (“VMT”) to downtown Ann Arbor, causing increased greenhouse gas pollution and other air pollution impacts;
(b) Construction of the Parking Garage will create significant localized environmental impacts such as particulate pollution, dust and noise in the project area; (c) The manufacture and synthesis of construction materials require vast amounts of resources and energy with associated pollution, impairment and destruction of the natural environment; and (d) Such other pollution impacts as may become apparent during the course of discovery in this matter.
149. During the City Council meeting on February 17, 2009, Environmental Commission Chairman Bean urged City Council to postpone its decision regarding the bonding and approval of the new Parking Garage until the City properly considered the need for the project, the environmental impact of the project and the range of less impacting alternatives to the project.
150. In clear violation of MEPA, the City failed to consider the environmental impacts of the proposed new Parking Garage and/or the alternatives to the Parking Garage.
What’s Being Asked of the Court?
REQUEST FOR RELIEF
WHEREFORE, Plaintiffs request the following relief:
(a) Declare that the City approved the Parking Garage project in violation of the Open Meetings Act;
(b) Declare that the City’s nondisclosure of requested documents violated the Freedom of Information Act;
(c) Enter an order which invalidates City Council’s approval of the site plan for the Parking Garage and the bonding to fund the project which occurred at its meeting on February 17 , 2009 ;
(d) An order which enjoins City Council members from engaging in any further private emails discussions during public meetings regarding the Parking Garage project or funding for the project; [emphasis added]
(e) Enter an order holding that the proposed Parking Garage project constitutes a threatened nuisance to Plaintiffs’ properties;
(f) Enter an order holding that the proposed Parking Garage project constitutes a threatened trespass to Plaintiffs’ properties;
(g) Enter an order holding that the proposed Parking Garage project is likely to pollute, impair or destroy the air, water and other natural resources;
(h) Enter a preliminary injunction requiring the City to undertake a study to determine the following:
- (i) Consideration of the environmental impacts of the proposed new Parking Garage;
- (ii) Identification and evaluation of the purpose and need for the proposed new Parking Garage; and
- (iii) Evaluation of alternatives to the proposed new Parking Garage;
(i) Enter a preliminary injunction which prohibits the City from constructing the Parking Garage until a comprehensive study as detailed above is completed;
(j) If construction of the Parking Garage proceeds, award Plaintiffs damages for the City’s interference with the use and enjoyment of their properties as more fully described above;
(k) If construction of the Parking Garage proceeds, award Plaintiffs damages for the trespass upon their properties committed by the City as more fully described above;
(1) Award GLELC its actual and reasonable attorney’s fees, as required by MCL 15.240(6);
(m) Award Plaintiffs their actual and reasonable attorney’s fees as required by MCL 15.271(4); and
(n) Award Plaintiffs such other relief as the Court deems just under the circumstances.
Chronicle Commentary on What’s Next
The city of Ann Arbor has 21 days to file a written answer to the court in response to the suit filed by GLELC. Based on The Chronicle’s understanding of the requirements of bond delivery – described at the beginning of this article – the fact that a lawsuit has been filed surrounding the issuance of the bonds could stop the parking garage project at least until the city files a response. Specifically, on our understanding, the existence of the lawsuit stops the project because it makes bond delivery impossible – because bond delivery requires there be no pending litigation on the issuance of the bonds.
The full DDA board will not meet to vote on the award of the construction manager job for pre-construction services until sometime in the week of Aug. 17. But if the lawsuit remains unresolved past the end of next week, it’s fair to start the clock on the length of the project’s delay.
The request (d) in the lawsuit by the plaintiffs that the court enjoin city councilmembers from further email communications on the topic of the underground parking garage is a narrowly drawn version of requests to the city council that The Chronicle made earlier this week. That is, The Chronicle’s requests have not yet been escalated to litigation, and the request is not confined to the topic of the underground parking garage. Those requests are numbered 1-3 in this excerpt from the full text of our communication.
On examination of the corpus of email exchanges between city council members during open meetings, it is clear that many of these exchanges augmented the open deliberations as viewed by a public observer, thus effectively shielding a portion of the council’s deliberation from public view. This is not a gray area and constitutes a violation of both the letter and spirit of the OMA.
It is The Chronicle’s position that the city council should adopt a policy to prevent such instances of Open Meetings Act violations in the future. Our concerns for the openness of future discussions of public policy could be addressed by immediately enacting a council policy that does the following:
- Prohibits electronic communications between members of city council during public meetings, because such electronic communications are not accessible to the public at the time of the meeting.
- Defines “electronic communications” broadly enough to include email, instant messaging, text messaging and use of third party message services such as Facebook.
- Does not rely on self-policing or FOIA requests made by citizens to check for compliance with the policy.
There are obvious technology solutions that would allow for the council to conduct its business in an efficient and convenient way, while still enforcing the openness that Open Meetings Act requires, a requirement which the Ann Arbor city council has not met in its recent history as demonstrated by the corpus of emails obtained by The Chronicle under the FOIA.
In light of our specific interest in the Open Meetings Act, it is that aspect of GLELC’s lawsuit that has been filed against the city on which we will focus as the litigation makes its way through the court.