DDA Ponies Up: Parking, Pipes, Planning

Downtown Development Authority board meeting (Jan. 6, 2010): The DDA authorized money for a range of different projects at its regular monthly board meeting on Wednesday.

Biggest on the list of one-time expenditures was $2.28 million spread over three years for 150 additional multi-space pay stations to replace on-street parking meters. Twenty-five such pay stations were already installed over the summer.

Next-largest was $600,000 for water main replacement, timed to coincide with the Fifth and Division street improvements. That was followed by as much as $500,000 for the Near North affordable housing project. Near North has won site plan approval from the city council and now faces the challenge of obtaining tax-credit financing.

Smallest on the list of authorized one-time money was up to $50,000 for consultant support for the Library Lot RFP review process.

Also in the mix was the authorization to redirect revenue from the 350 S. Fifth Ave. (former YMCA) surface parking lot to the city of Ann Arbor. On Dec. 21, 2009 the city council voted to request the DDA take that action. What the DDA board actually authorized is a payment to the city per year of whichever amount is greater: (i) $100,000 or (ii) the net revenue from the lot, after installation and operational costs are recovered by the DDA.

The meeting also included the precursors of some eventual conversation about the role of the DDA’s executive committee and its ability to act on behalf of the whole board. That recalled a related issue still left over from last summer: Can the mayoral line of succession be invoked to fill the mayor’s spot at a DDA board meeting? 

Near North Affordable Housing: $500,000

The allocation of up to $500,000 from the DDA’s affordable housing fund to the Near North affordable housing project was a request that had worked its way through the DDA’s partnerships committee. From The Chronicle’s report on the DDA’s Dec. 2, 2009 board meeting:

Reporting out from the partnerships committee, Sandi Smith said that the Near North affordable housing development had asked the DDA for $500,000. Near North, which was approved as a PUD (planned unit development) by the city council at its Sept. 21 meeting, would include 39 total units – with 25 targeting incomes at less than 50% of the area median income (AMI), and 14 units of supportive housing targeting incomes at less than 30% of AMI.

Smith noted that the Near North development was within 1/4 mile of the DDA district, which was within the area where the DDA’s policy supports affordable housing. This was a policy adopted at the DDA board’s March 4, 2009 meeting. It was during meeting that former board member Dave Devarti was “channeled” in support of the idea of not limiting the range to just 1/4 mile – an idea that ultimately did not win the day.

The resolution before the board actually allocated $400,000 from the DDA’s housing fund, with an additional $50,000 to be awarded contingent on achievement of Silver LEED certification, with another $50,000 beyond that for achievement of Gold LEED certification. The money will be awarded only upon issuance of a certificate of occupancy.

The linking of DDA support to the achievement of the LEED standard, which reflects the energy efficiency of the building, was somewhat unsurprising.

Why? Sandi Smith serves on the city council as well as the DDA board. And during city council deliberations on the Near North project, Smith had focused some of her questions on the energy efficiency of the building.

Its energy efficiency was presented as one of the public benefits needed to justify the variance in zoning required by the project. [Near North was brought to the council as a planned unit development (PUD) and faced considerable neighborhood opposition based on its size.]

Smith’s interest in supporting energy efficiency of buildings was also reflected Wednesday in her report to the board on the DDA’s energy saving grant program. In the second year of the program, 52 businesses had won approval for their applications, and so far all but four had selected an energy auditor.

The DDA’s affordable housing fund, out of which the grant to Near North will be funded, was established in 1997. In recent years, the DDA has allocated $200,000 per year to the fund. In the course of board deliberations, Smith would recall some frustration that depositing money into the fund did not itself necessarily equate to doing something for affordable housing – it was nice to have a project towards which the money could contribute.

DDA board member John Mouat quipped that the good news was that the DDA was spending the money for the next two years – and the bad news was that the DDA was spending the money for the next two years. But noting that he did not see some alternative project on the horizon, Mouat was content to support the allocation to Near North.

At Wednesday’s meeting, Michael Appel, executive director of Avalon Housing, the nonprofit organization that has partnered with Three Oaks Group on the Near North project, was on hand to answer questions from DDA board members.

Appel gave a brief description of why the federal tax-credit market – the mechanism through which Near North would be financed – was depressed. The whole market, he said, depended on buyers of tax credits. Historically, the buyers of large amounts of federal tax credits are entities that expect to have considerable federal tax liabilities (i.e., expect to earn large profits) for the period of compliance, which is 15 years. The number of such entities has dwindled since the economic downturn, he explained.

Still, Appel was optimistic that the location of Near North was a selling point. The worst case scenario, he said, was that the investor would be part owner of an apartment building in Ann Arbor. He reported that he’d spoken with three or four different investors in the last month.

The tax-credit market depends on the credits distributed by the federal government to the states, which then further allocate the credits to particular projects. In Michigan they’re awarded through the Michigan State Housing Development Authority (MSHDA, pronounced /mish-da/).

During deliberations, mayor John Hieftje cautioned that Ann Arbor’s location could be seen by MSHDA  somewhat negatively, because the cost of land acquisition and construction was relatively high compared to other locations in the state. That is why, he said, MSHDA would see additional local support, in this case from the DDA, in a positive light.

Appel described a timeline in which the city of Ann Arbor would be issuing an RFP for allocation of HOME funds in mid-February, for which Avalon will be applying. That would set them up for their tax-credit application at the end of February, he said.

After the vote, he told The Chronicle that they hoped for something in the same ballpark in HOME funds as they had been allocated by the DDA.

Outcome: The allocation of up to $500,000 from the DDA’s affordable housing fund to the Near North project was unanimously approved.

Library Lot RFP Consultant: $50,000

The resolution before the board allocated up to $50,000 for a consultant to help evaluate the merits of proposals for development of the city-owned Library Lot. A consultant would look at projects recommended for analysis by a committee that’s reviewing responses to the city’s RPF (request for proposals) at that site, where the DDA is building an underground parking structure.

Public Commentary on Library Lot Consultant

Two people spoke on the subject of the Library Lot during public commentary at the start of the meeting. The DDA would put together a request for qualifications (RFQ) for hiring a consultant, as well as provide the money to pay for it.

Peter Allen, a local developer, began by asking the board how many of them had ever attended a meeting of the International Downtown Association – several board members raised their hands. Allen is also an adjunct instructor for the University of Michigan’s Ross School of Business and Taubman College of Architecture and Urban Planning – for a recent class, some of his students developed proposals for the area around that site. [Chronicle coverage of those proposals: "Column: Visions for the Library Lot"]

Allen continued by saying that the best “course” he ever had was at an IDA conference at a session run by former urban planning professor Norbert Gorwic. He asked the DDA to consider three points as they select the Library Lot consultant. First, he said, consider that the development decisions on the Library Lot are 50-100 year decisions. He sketched one possible vision, which included the space becoming “the downtown Diag, the place you take your guests.”

He said it would be important to take infrastructure into consideration as the background. Among those infrastructure considerations, he said, was the possibility of building a north-south trolley to connect the Plymouth Road corridor to downtown and further south to State Street. The DDA is currently helping to fund a study of high-capacity transit on that corridor. He also stressed the impact of decisions by the AATA regarding its Blake Transit Center downtown – what if AATA elected to go with a dual spoke-and-hub system, with an additional hub near the medical center? [The additional hub that Allen was referring to is the yet-to-be-built Fuller Road Station.]

The second main consideration stressed by Allen for the Library Lot was the need for world-class architecture. It would have to be “the most extraordinary piece of design Ann Arbor has contemplated,” he said. He noted the plaza component of Library Lot need not be 100% of the area –  the 1,200-square-foot sculpture park in front of the People’s Food Co-op, he said, was very successful.

The third point mentioned by Allen as essential to consider was an inclusiveness of process. Every legitimate stakeholder needed to be talked to and listened to, he said.

Also speaking to the DDA on the issue of the Library Lot was Alan Haber, who helped craft one of the six proposals for the Library Lot. The proposal that Haber helped write, along with one other proposal, has been eliminated from further consideration by the RFP review committee. However, at the city council’s last meeting, the two council representatives to the review committee – Stephen Rapundalo (Ward 2) and Margie Teall (Ward 4) – indicated that they’d bring the suggestion to the committee to re-include the two eliminated proposals in the interview process. [Chronicle coverage: "Mixed Message from Council on Library Lot"] The two eliminated proposals envision the Library Lot primarily as open space.

Haber told the board that the minutes from the DDA’s November board meeting did not accurately reflect his public commentary. The board’s minutes, which they’d approved at their December meeting, read:

Mr. Haber introduced himself as a member of the Ann Arbor Committee for the Commons, and said that the group is interested in building a small community center on top of the new underground parking structure.

It was not a small community center, Haber said, but a large one that the Ann Arbor Committee for the Commons wanted to establish there. He said that he’d communicated with the executive director of the DDA, Susan Pollay, and that she’d shown him where the complete video of the meeting could be viewed on the DDA’s website.

[On the video, Haber says that the Committee for the Commons imagined the space "not for a big building, but for a small-scale development ... ," and then describes how the space would be a focal point for community gathering.  It's apparent that Haber's intent was to describe a community center encompassing the entire space, and that any smallness in size likely referred to actual buildings – artists studios, for example – that might be constructed.]

Haber told the board that he was expressing the view of the public, and that they wanted a public process for keeping public ownership of the parcel, which should remain primarily open and green space. He contended that if you ask people what they want, most everyone will say: a park. The commons concept of self-governance, Haber said, was an age-old and worthy one. He invited board members to become members of the Ann Arbor Committee for the Commons.

Board Deliberations on Library Lot Consultant

Board chair John Splitt, who serves as the board’s representative on the Library Lot RFP review committee, reported to the board the current status of the committee’s work – their elimination of two proposals. He also reported the suggestion that will come from the city council’s representatives to the committee at its next meeting to re-include those proposals in the interview process.

Board member Sandi Smith clarified with Splitt that the money being allocated for a consultant would not be applied to support the public process scheduled for Jan. 20. That’s the date set for interviews with developers and a public reception.

Board member Gary Boren emphasized that any consultant who might be selected “will not have any skin in the game.” Board member Joan Lowenstein offered that in the past some very good projects in the city had foundered on the financial ability of the developer to actually build the project. The consultant, she said, was meant to help analyze the financial component.

Board member Russ Collins emphasized that the decision about what went on top of the underground parking garage was not a DDA decision. He noted that the DDA had been encouraged to take a thoughtful approach, and that funding the consultant was their contribution to that approach.

The question of who was making what decision was echoed in board member John Mouat’s comments. He said that he was generally “not enamored of the city’s RFP process.” While he supported the idea of the due diligence that a consultant would help provide, he was concerned that the DDA’s funding would contribute to a “muddying of the waters” with respect to the city and the DDA’s responsibility for the decisions.

Mayor John Hieftje said he also had some reluctance about the process. However, he said that the outcome of the 415 W. Washington RFP process – which he assumed Mouat was referencing – was acceptable. No one proposal had risen to the top, said Hieftje, and the review committee had had difficulty trying to get the three different proposers to work with each other. [Mouat served on the 415 W. Washington RFP review committee.]

There was brief discussion about how much of the $50,000 was likely to be spent. Splitt said it would depend on how many of the proposals the consultant was asked  to analyze – that number would fall between zero and six.  At one point, board member Keith Orr quipped, “So no more than $50,000 and no less than zero!”

From the DDA’s description of the consultant’s recommended tasks:

Determine if the projects submitted to the City are financially feasible and make economic sense in the Ann Arbor marketplace.

Determine if the developers who submitted proposals to the City are financially stable and have the capacity to construct and complete their projects as proposed.

Determine what the likely timing for each proposed project might be following selection by Ann Arbor City Council, including design development, securing financing, and construction.

Help the City determine which project will provide the maximum financial return to the City.

Help the City determine which project will provide the greatest community benefits.

Help the City determine which project will provide the greatest benefit to downtown.

Help the City create and deliver a public process that encourages community input and involvement.

Provide information on the impact of similarly scaled projects in similarly sized communities.

Assist the City as needed in negotiations with the selected project team.

Outcome: The board approved the funding for the consultant, with dissent from Mouat.

Parking Lot Revenues to City: $100,000 per year

At its Dec. 21 meeting, city council passed a resolution that requested the DDA to redirect net revenues from the 350 S. Fifth Ave. surface parking lot (the former YMCA site) to the city of Ann Arbor. Parking system revenues ordinarily flow to the DDA, with payments by the DDA to the city governed by a 10-year parking agreement struck in 2005. That agreement calls for the DDA to pay the city up to $10 million through 2015, and the DDA has already paid the city the full amount of that agreement.

The resolution before the board was different from what had been requested by the city council. Because the DDA calculated that the installation costs for the surface parking lot were around $400,000, there would effectively be no net revenue for many years. Because the intent of the council’s resolution was to start generating revenue for the city, the DDA’s resolution called for the DDA to pay the city the greater of two numbers per year: (i) $100,000 or (ii) net revenues, i.e.,  revenues minus installation and operating costs.

The DDA’s monthly parking report for November 2009 shows that the old YMCA lot generated about $25,000 in revenue, versus $5,000 for the same period in 2008. The jump in usage is due to the recent closure of the Library Lot as a surface parking lot to begin construction on the underground parking garage.

[In giving a status report on the progress of the underground garage construction, John Splitt – chair of the capital improvements committee – said that delays in getting utilities moved had delayed the start of earth retention work. But around Jan. 25 people could expect to see "the big drill."]

Board member Sandi Smith, who had initiated the proposal in her role as a city councilmember, said she appreciated that the goal of generating revenue to the city remained in the substitute resolution. Board member Keith Orr characterized the arrangement as the DDA simply taking longer to repay itself for the installation costs.

Outcome: The board unanimously approved the redirection of revenues from the former YMCA surface parking lot to the city of Ann Arbor.

Water Mains: $600,000

Timed to coincide with the Fifth and Division street improvements were the replacement of water mains under those streets, as well as behind the library off of William Street. The DDA had approved $226,000 for the work in August 2009. But when the work was bid, the actual costs for the Fifth and Division water mains exceeded estimates, and an alternative to replacement of the water main behind the library was developed. Under the new plan, the third water main will be placed under the planned Library Lane, which will be a mid-block cut-through between Fifth and Division streets.

[In giving an update on the Fifth and Division improvements, John Splitt said that work on Division was not yet complete but had wrapped up for the year. It would be finished in the spring, when work on Fifth Street would commence. Traffic lanes on Division, he said, would be reopened, likely in the next few days as soon as signage was installed telling people where they could park.]

Outcome: The board unanimously approved $600,000 for water mains without discussion.

Parking Pay Stations: $2.28 Million

In Roger Hewitt’s absence, Leah Gunn introduced the resolution out of the operations committee to purchase additional multi-space parking pay stations. Twenty-five of the ePark stations have already been purchased and installed in the downtown area. The resolution before the board called for an additional 150 stations to be installed over the course of the next three years – 37 in FY 2010, 75 in FY 2011, and 38 in FY 2012 at a total cost of $2.28 million.

Gunn described the public’s reception of the new pay stations this way: “We’ve found that everybody likes them.” Sandi Smith’s characterization was somewhat less sanguine, saying that she’d heard some complaints from people in the disabled community about difficulty in navigating to the stations.

Smith queried Joe Morehouse, deputy director of the DDA, about possible ways to address those concerns. He described how it was possible to pay using a cell phone, while still in the vehicle, without going to the pay stations at all.

Later in the meeting, Morehouse’s work on parking demand management would be called out for special mention by board chair John Splitt. An article written by Morehouse had been featured in the December 2009 issue of “The Parking Professional,” Splitt reported, a publication of the International Parking Association. The lighthearted query from one board member about whether there’d been a centerfold was met with a response from another one: “No, it was just a spreadsheet.”

Board member John Mouat said he noticed that snow had been cleared from around the pay stations and asked who had been doing that. Mark Lyons, general manager of Republic Parking, confirmed that it was Republic Parking who did snow clearing around the pay stations.

Outcome: The board unanimously approved the purchase of additional parking pay stations.

Other Communications

There were several other briefings not related specifically to resolutions considered by the board.

Bylaws

A draft of the DDA’s bylaws came up for initial discussion only. The board focused on the role of the executive committee and its ability to act on behalf of the entire board between meetings. The executive committee had only acted in that capacity one time in the history of the organization, said executive director Susan Pollay – in connection with a loan to the city for acquisition of the old YMCA property.

Board member Gary Boren expressed concern about whether the executive committee could, in fact, be given that authority by the board – he wondered if that was permissible under the state enabling legislation for creation of the DDA. Further, he said, if a subset of the board’s membership was able to act on behalf of the entire board, then he thought the Open Meetings Act would likely apply to its meetings.

During the opportunity for public commentary available at the end of the meeting, Brad Mikus inquired as to whether the issue of a vote by an acting mayor had ever been resolved. Earlier in the summer, the question had arisen about whether Leigh Greden, then a councilmember representing Ward 3 and fourth in the line of mayoral succession, could cast a vote at the meeting. [Chronicle coverage: "Split DDA Board Agrees on Splitt"]

The response given Mikus was that it was not a bylaws issue, but that it was still unresolved and being looked at.

Downtown Citizens’ Advisory Council

Ray Detter gave his usual report from the Downtown Citizens’ Advisory Council, which typically meets the evening prior to DDA board meetings. He said that the council had talked a bit about the six proposals for the Library Lot, and had contemplated what might happen if all six proposals were rejected. In that case, Detter said, it would make sense to think of a more comprehensive approach to planning the entire area around the Library Lot.

Detter reported, however, that they’d spent the majority of their time talking about Courthouse Square, a housing development for seniors at Fourth and Huron. There have been numerous complaints from residents about security and conditions there. Detter called for the creation of a task force, including membership from the city council, the city attorney’s office, residents of Ward 1, residents of the building, the DDA, and the city/county community development office.

Detter said there were 10 residents of the building who suffered from mental illness, whose needs were being addressed and supported. However, he expressed concern that as more tenants were directed to Courthouse Square from the county’s shelter, they might need more support than could be provided.

Pedestrian Friendliness

Reporting out for the transportation committee, John Mouat said the committee had narrowed its focus on three items in trying to find low-cost, high-impact projects for enhancing the pedestrian experience downtown. The three projects are (i) minimizing sidewalk obstructions and getting bikes off sidewalks, (ii) trees and planter boxes/urban gardening, and (iii) trip hazard mitigation.

Mayor John Hieftje requested that board members consider having the transportation committee bring forward a recommendation for the DDA board to take a position on bicyclists riding on sidewalks. At the city council meeting on Monday, two councilmembers – Marcia Higgins (Ward 4) and Margie Teall (Ward 4) – had expressed their concern about bicyclist behavior, in particular on sidewalks.

Building Tour

Some of the board members had been on a tour of the municipal building addition currently under construction next to city hall. Joan Lowenstein reported that it was impressive how much was being accomplished on the reduced budget. As one example of some of the cost engineering, she cited the polished concrete that’s being used on some of the upper floors.

Present: Gary Boren, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Newcombe Clark, Jennifer S. Hall, Roger Hewitt.

Next board meeting: Noon on Wednesday, Feb. 3, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]