Ann Arbor DDA: Let’s Do Development

Friday morning before the Memorial Day weekend marked the first public meeting of the city council’s so-called “mutually beneficial” committee – first created and appointed back in July 2009.

And later in the afternoon, the board of the Ann Arbor Downtown Development Authority met for a retreat to give direction to its own “mutually beneficial” committee.

The two committees are charged with the task of redefining the agreement between the city and the DDA that allows the DDA to manage the city’s parking system.

From the city councilmembers’ perspective, the ball was in the DDA’s court. They were hoping that the DDA’s retreat later in the day would reduce the items on the term sheet that is supposed to underpin the city-DDA conversation.

At their retreat, the DDA board did eliminate an item on the term sheet – code enforcement, other than parking regulations, was not something for which they wanted to assume responsibility. The remaining three term sheet items – parking enforcement, provision of services, and development of city-owned property – stayed on the white board. The clearest consensus among board members seemed to be around the idea that the DDA should focus on development.

But a couple of additional items were added into the mix – issues related to Village Green’s City Apartments project. That project, located at First and Washington, has previously seen its site plan approval option to purchase extended through June 30, 2010. City council action would be required in the next month, if it’s to be extended again.

Downtown police beat patrols were also left on the board as an additional item of discussion.

At Friday’s retreat, the board heard the same message from Susan Pollay, the DDA’s executive director, that she’d conveyed at a partnerships committee meeting two weeks earlier – the reason for the DDA’s existence was to spur private investment in the downtown.

But as a group, there was an uneven embrace of that message. Some board members preferred to identify “development” as meaning something broader than building new infrastructure, suggesting that a more general “economic development” approach might also be appropriate for the DDA.

And one other idea was thrown up on the white board, but did not stick: altering the DDA district boundaries.

Parking Agreement: Term Sheet and Basic Background

The term sheet that the DDA board whittled down at its Friday afternoon retreat is to be the basis of future discussions between the city and the DDA about a revision to the contract under which the DDA manages the city’s parking system. The hoped-for outcome of that discussion is a new parking contract between the two entities, signed by Oct. 31, 2010.

The contract had been revised in 2005 to provide for a $1 million-per-year parking facility rental payment by the DDA from 2005 through 2015. The contract included a provision allowing the city to draw up to $2 million in a given year, provided the total over 10 years did not exceed $10 million. The city elected to draw $2 million in each of the first five years, leaving the city without a right, under that contract, to any payment from the DDA starting next fiscal year (FY 2011), which begins July 1, 2010.

Already in July 2009, both the city and the DDA had created and appointed committees to undertake the discussion that was to result in a new parking agreement. That new revised agreement was intended to be in place in time for the city to plan its FY 2011 budget. No long-term revision was reached by then, but a one-time $2 million payment was authorized by the DDA last month, which allowed the city to incorporate an additional $2 million into its roughly $80 million annual general fund budget for FY 2011.

The committee structure that had been set up to address a revision to the parking agreement was not used, however. Instead, city councilmembers and DDA board members elected to form a group that worked out of public view over the first four months of this year. That group produced a term sheet of items that is intended to underpin more detail-focused conversations on a longer-term contract revision.

The creation of the term sheet was enough to convince a 7-member majority of the 12-member DDA board that it should pay an additional $2 million to the city – effectively a one-time unilateral revision to the parking contract. The language of the DDA’s resolution authorizing the payment, passed in early May, calls on the future conversations to be publicly accessible.

For its part, the city council created its second mutually beneficial committee at the council’s May 17, 2010 meeting, and appointed as members Carsten Hohnke (Ward 5), Margie Teall (Ward 4) and Christopher Taylor (Ward 3). All city committees, including sub-committees of the city council, are required – by city council resolution – to conform to the conditions of the Michigan Open Meetings Act.

Teall and Hohnke were already members of the council’s mutually beneficial committee appointed in July 2009. The third member appointed at that time was Leigh Greden, but he was defeated by Stephen Kunselman in the August 2009 Democratic primary.

Term Sheet Items

Starting with the existing parking agreement as a baseline, the term sheet covers four broad topics as points of discussion for working out details for a contract revision that would provide the city with a continuing revenue stream from the parking system. Over the last five years, that revenue stream has amounted to $2 million each year.

Parking Enforcement [...]
Throughout the City, the DDA will have primary, but non-exclusive, responsibility for enforcement of public-parking-related rules and regulations, including without limitation, expired meters, parking structure rule compliance, loading zones, and established residential parking permit zones (“Parking Codes”). [...]

Community Standards Code Enforcement in the DDA [...]
Within the DDA, the DDA will have primary, but non-exclusive, responsibility for enforcement of City ordinances now generally enforced by community standards officers, including without limitation, ordinances related to sidewalk clearance, debris, graffiti, and alley upkeep (“Community Codes”). [...]

Services in the DDA [...]
Within the DDA boundaries, the DDA will have primary, but non-exclusive, responsibility for delivering the preliminary list of services identified on “Exhibit 1”, attached. The DDA will deliver the identified services with at [sic] the identified service levels and frequencies. Generally, these are all services delivered currently delivered [sic] by the City within the DDA boundaries, excluding public safety, street clearing, and other services as identified in “Exhibit 1”. [...]

Development of City-owned Property Within the DDA District [...]
The working group envisions that the DDA would serve as a visioning, initiation and implementation engine for development of City-owned property within the DDA district. The nature and extent of this role will be discussed, considered and, if approved, implemented in parallel to any omnibus agreement, but would not be part of that agreement. [...]

Since the term sheet has been made public, some negative statements have already been heard from city councilmembers and DDA board members alike about the idea that the DDA would assume responsibility for enforcement of parking or community standards codes. On the city’s side, mayor John Hieftje and Stephen Kunselman (Ward 3) have expressed their confidence that city officers are already able to implement a “customer service” approach to parking enforcement without assigning responsibility to the DDA. Kunselman has expressed his concerns about setting up a “shadow government.”

And at the DDA board retreat on Friday, the overwhelming sentiment was against pursuing DDA responsibility for community standards enforcement. So that won’t, from the DDA’s side, be a topic for future discussions.

In that regard, Friday’s DDA retreat will be counted as progress by the city’s mutually beneficial committee. They were anticipating a reduction of items on the term sheet to help focus the future conversation. [.pdf of complete term sheet]

Friday Morning: City Council Mutually Beneficial Committee

On Friday morning, May 28, the council’s committee – Christopher Taylor, Margie Teall and Carsten Hohnke – discussed little of substance, focusing instead on procedural and scheduling matters.

Public notification of their first meeting experienced a minor glitch. The posted location of the meeting in the lobby of city hall indicated the committee would meet on the second floor, but the city’s online Legistar system indicated it was to be held on the third floor. The meeting turned out to take place on the third floor in the conference room right across from the elevators.

City Council MBC: Hope for a Reduction in Term Sheet Items

Taylor reported that the term sheet had elicited some “atmospheric” discussion from city councilmembers and DDA board members – there’d been satisfaction expressed with some items and dissatisfaction expressed with others.

So Taylor figured there’d be a “winnowing” of issues on the part of the DDA board, just as there would be a similar winnowing on the part of the city council if a conversation like the DDA board’s retreat were to take place. Teall indicated that she was unaware that the DDA was having a retreat. So Taylor introduced the possibility of a city council working session to get a better sense of what city councilmembers felt about the term sheet items.

After the two bodies had reduced the number of issues to be discussed, Taylor said, the two committees would have a better starting point to put together a more formal document. Teall wondered what the three of them could accomplish that morning – she felt like there wasn’t a lot they could do until they heard a response from the DDA.

City Council MBC: Which Term Sheet Items Are Most Challenging?

Hohnke suggested that it might be possible to rank order the issues in terms of how difficult they might be to tackle – based on educated guesses about what the DDA and the council might leave on the term sheet.

For example, services in the DDA area – tree trimming, tree watering, and graffiti removal, he said, would involve small costs. He thought most councilmembers would think it made sense to transfer that to the DDA.

But Hohnke wondered if it would make the most sense to use their fresh energy on the most challenging of the items or to knock out the easiest items first.

Teall characterized the DDA board at their partnerships committee meeting on May 12 as “divided” on many of the issues. With respect to services, for example, there was more of an interest in using the city to provide services on State Street than on Main Street. On Main Street, she pointed out, a business improvement zone (BIZ) has recently been approved [with support from the DDA and approval by the city council] to provide services like graffiti removal and snow clearing.

City Council MBC: Guesses About What the DDA Wants

Within the topic of development, Teall said there was also some division on the DDA board. Executive director Susan Pollay suggested that the DDA should focus on development, but some board members were not certain they wanted to do that, Teall said. For her part, Teall said she felt the DDA had the expertise, energy and drive to push development forward – she favored that.

Teall said she supported an idea that DDA board member Russ Collins had expressed at one of their previous meetings that there should be an “ombuds-person” to guide development. Teall noted that the item addressing the role of the DDA in downtown development hadn’t been fleshed out very much on the term sheet, but that there was considerable interest in that expressed at the May 12 DDA partnerships committee meeting.

As far as trying to rank order the items by how challenging they are, Teall noted that the term sheet itself already reflected a preliminary assessment of difficulty – parking enforcement was estimated to take 6-12 months to transition to the DDA, whereas community standards enforcement was projected to take 12-24 months. But Taylor indicated that this was an estimation of how much effort it would take to implement after an agreement. Hohnke was focused on how much work it would take to reach an agreement.

On the question of parking system responsibility, Taylor cast the issue against the background of the parking meters that the city had proposed to install outside the DDA area as part of last year’s budget proposal for FY 2010. That had happened without – as far as he understood the situation – a fulsome discussion with the DDA. So a hypothetical example of a specific point that could be part of the agreement, Taylor suggested, would be that the DDA would be given the authority to set the times for meter enforcement, with the city council having the authority to override decisions.

After brief speculation about what the DDA board’s retreat might yield in the way of results, Hohnke suggested that really the ball was to some extent in the DDA’s court. Taylor supported that view, saying the ball was “entirely” in the DDA’s court.

City Council MBC: Scheduling, and Does the DDA Have a Committee?

So Taylor suggested that the two bodies – the DDA and the city council – could identify areas of interest on the term sheet that they want to focus on and that there would be areas of overlap for the two committees to take forward. Teall then questioned whether the DDA board had their own “mutually beneficial” committee. Hohnke said he thought that the DDA board had such a committee, with Taylor saying he believed the DDA board had a committee, but he did not know for sure.

The three councilmembers then discussed the scheduling of a possible working session of the council, and considered the usefulness of meeting with the DDA’s committee beforehand to help set the agenda for that working session. Teall said she felt it would definitely be useful to hear from the DDA’s committee about the outcome of the retreat before setting the working session agenda. The outcome of the retreat, she said, could turn out to be that the DDA doesn’t want to do anything except for the development piece.

Hohnke suggested that based on what survived from the term sheet, city staff could be asked to develop presentations for the working session.

Tentatively, the committee decided to try to schedule a “mini working session” for Monday, June 21 starting at 6 p.m., which would provide a fixed end time of 7 p.m. when the council’s regular meeting starts. It would be primarily for information distribution and perhaps some conversation.

They decided that a June 21 working session would mean that a meeting of the two mutually beneficial committees of the DDA and the city should be scheduled for the following week [May 31 - June 4] and that they should try to meet again as a committee before the meeting with their DDA committee counterparts.

Taylor summed up the committee’s work for the morning by declaring, “The meeting to schedule the meetings has occurred.”

DDA Retreat Part I: Structure, Enforcement, Services

Entering the DDA board meeting room on Friday afternoon, Leah Gunn cheerily declared that she’d put two-hours worth of money in a parking meter and that they’d need to wrap things up in under that time. The scheduling of the retreat had been done on short notice, so several board members were not able to be there at the start. Eventually eight out of 12 members appeared. Missing were John Hieftje, Jennifer S. Hall, Gary Boren and Russ Collins. Hieftje and Hall’s attendance was not expected due to family circumstances.

If parking enforcement was effective in downtown Ann Arbor on Friday, then Gunn returned to her car to find a ticket on her windshield – the retreat went roughly two and a half hours. The report below is organized partly based on the term sheet items. But there were other more general topics introduced as well.

In this section we handle all term sheet items other than the assignment of a stronger role for development to the DDA. That includes general issues related to the parking agreement, parking enforcement and community standards enforcement.

DDA Retreat Part I: Overall Parking System, Length of Contract

The overall term of the agreement was not determined, said Roger Hewitt, but he wanted the term of the eventual agreement to be fairly long. That was essential for long-term planning, he said, and would also eliminate the haggling every few years and finally “put things to rest.” He did not want the parking agreement opened up every time there was a budget crisis.

Right out of the gate, however, Newcombe Clark questioned whether that kind of long-term arrangement was possible, given the fact that the city could take revenues from parking facilities not covered in the agreement – the Fifth & William (old YMCA) surface lot and the 415 W. Washington St. lot, for example. In addition, Clark said, the city could take lots currently in the agreement and remove them. How could the DDA runs its budget under those circumstances?

Hewitt clarified that a key idea not necessarily indicated as a separate item on the term sheet was that the DDA would assume responsibility for the entire parking system of the city. The city would not be “in the parking business,” Hewitt said.

There would be a need, Hewitt acknowledged, for the DDA to have more flexibility to adjust parking rates in order to implement the dynamic pricing associated with demand management strategies. There would be different rates for different times of day, varying by location.

As far as the revenue stream to the city from the parking system, Hewitt reported that one way it had been discussed was to make it a fixed percentage of gross revenue, but that there were a variety of ways to approach it. Clark observed that a fixed percentage of gross revenue would be difficult to budget against.

Hewitt suggested putting the issues of money and the length of the agreement aside and focusing on the structure of the agreement. Clark said he wanted to identify the areas of divergence between what the city council was thinking and what the DDA was thinking, and identify them early. He was concerned with the philosophy of the contractual mechanisms that had not been in place up to then, he said.

For example, Clark wanted to know if the mechanism of the payment would be a rental agreement, in which the DDA was paying rent to use city-owned assets – that is, parking structures and lots. Hewitt confirmed that this was his understanding.

At one point, when Sandi Smith mention a $2 million figure, Clark asked if they were now talking about payments in addition to the one they’d just authorized – were they talking about a $10 million deal? Susan Pollay brought that discussion back to the issue of finding a benefit to the downtown in the new agreement. The money that the DDA is paying to the city needs to be connected to some benefit in the downtown. Some operations, Pollay said, that could be performed “better” by the DDA, and which would benefit the downtown. It would be a qualitative benefit rather than a quantitative benefit.

DDA Retreat Part I: (Term Sheet) Parking Enforcement

Roger Hewitt characterized the parking enforcement as the most straightforward of the term sheet elements. It included writing tickets for expired meters, loading zone violations, no-parking violations, fire-hydrants – a function currently performed by the city’s community standards officers. Hewitt said that the idea, which had been discussed for a number of years, was to put the DDA in charge of all that. The idea was that the philosophy of enforcement could transition from revenue generation as a goal, to one where compliance is achieved with “more carrots and less stick.”

Something that really upsets visitors to the downtown, Hewitt said, is getting a parking ticket for an expired meter. Sandi Smith agreed with Hewitt, saying that receiving a parking ticket made people feel like they were breaking the law, when they were not intending to do that. It’s the most frequent time that an average citizen is going to cross with the law, she said, and they don’t need to cross with the law.

Leah Gunn noted that with respect to visitors, the important point was that the city wanted to keep them coming back. Joan Lowenstein pointed out that every place in the whole world has parking tickets, so she suggested it was an over-sensitivity to the idea of getting a parking ticket. Smith suggested it was worth being sensitive to the over-sensitivity, because there are other options to shop and dine, where there are acres and acres of parking with no threat of a parking ticket [Briarwood Mall, for example].

Newcombe Clark suggested that the idea was to transition parking enforcement to a “service.”

With respect to both enforcement issues – parking and community standards codes – John Mouat expressed concern about how the DDA might staff the operation. Smith said the idea was to have a “kinder, gentler approach.” Worrying about who would do it was something that had not been sorted out. Mouat questioned the assumption that the DDA would do it better than the city. Hewitt explained that the key to that was understanding the definition of “better.” For the city, he said, “better” meant more net revenue. For the DDA, he continued, it meant happier people coming downtown and coming back downtown.

Mouat said he questioned the assumption that the DDA could really do a better job than the city at parking enforcement. He said that “Ann Arbor just loves to dump on the city for doing such a bad job at everything,” but that in his experience over the years, the city staff actually did a really good job at most things.

Keith Orr stressed that it was very important that the enforcement and the management of the parking system be coordinated by one entity, so that the goals of demand management could be met. And Hewitt summarized by saying that the DDA would not do a “better” job but rather a “different” job than the city.

Hewitt noted that community standards officers are part of the police department and their concern is primarily public safety. But parking enforcement – aside from parking next to a fire hydrant and the like – was not so much a public safety issue, Hewitt said. He noted that enforcement was a logical piece to fit in with parking management, which the DDA already did.

Smith wondered if there were some sort of hybrid, where the city would provide the service – with the DDA’s input and guidance. Clark expressed some frustration with the level of conversation at that point, saying, “We have to get out of the plane and look at this flood, we can’t just keep circling around.”  The basic issue: They were talking about privatizing enforcement in the same way they already did with other functions through Republic Parking. Can it be competitively bid? Is the DDA even allowed to do that?

Smith acknowledged that there was an AFSCME union concern that had already been expressed to the city about conversion of those enforcement jobs to non-union positions. [The city jobs of collecting the meter money had previously been converted to private jobs, through a contract with Republic Parking, when the city agreed to allow on-street parking revenues to flow to the DDA.] She said it was not possible for enforcement to be transitioned to private positions under the current AFSCME contract.

Smith told Clark the current AFSCME contract ran through June 2011. Clark said the key issue for him was whether the DDA could really run enforcement more efficiently than the city. In addition, he said that as a downtown resident he liked knowing that he could call the police if someone was parked blocking his garage.  Would he need to call Republic Parking in the future?

For Mouat, a key question was whether Republic Parking – or some other private contractor – could be contracted to do the job. He was concerned about implications for staffing at the DDA.

Susan Pollay said it was her understanding that the DDA could contract with Republic to perform parking enforcement – it would not have a dramatic effect on DDA staffing levels, she said.

Hewitt indicated that however the details were worked out, the Ann Arbor police department would still have the authority to issue tickets if they chose to do so. That had been very clear, he said. The city could not give up the right to issue tickets.

Pollay noted that within the city, parking enforcement is under a patrol area within the police department, and that’s under the city administrator, who in turn reports to the city council. That meant a lot of layers between policy and implementation, she said. Gunn echoed Pollay’s sentiment by saying that the DDA would be “closer” to parking enforcement and would thus do a better job.

Smith went back to the idea that “seaming together” the enforcement with the operation of the parking system was a No. 1 goal. She called for a straw poll on the issue of combining enforcement and operation. Gunn said she supported that idea. And she said there needed to be assurance that the city would suffer no net loss due to the way the parking system is enforced.

Smith suggested that it should be thought of as a “soft landing.” If the demand management strategy works, she said, then there will be fewer and fewer tickets issued, because there will be less opportunity to break the law. It would be a “weaning” process from fines as a revenue source, she suggested.

Hewitt raised the possibility that in the future it might be possible to simply charge people for the time they actually used an on-street spot – through sensor technology – and remove over-the-limit tickets from the set of possibilities. People would pay a graduated rate – it would simply be very expensive past a certain time. The revenues would shift from fines to charges. A ticket upsets people more than a charge on their credit card, Hewitt ventured.

Smith noted that the fine revenues had already shown decreases over the last couple of years.

Clark alluded, however, to a projection that Tom Crawford, the city of Ann Arbor’s CFO, had made that suggested sooner rather than later, parking enforcement would cost more than it generated in revenue through fines.

Clark also came back to the idea that enforcement without the ability to set the fines was “toothless and meaningless” to the DDA.

Smith moved the retreat towards wrapping up the parking enforcement discussion by asking people to reflect on the issue as related to the DDA’s capacity and its mission – did they want to leave it on the board or wipe it off?

The straw poll showing of hands was summarized by Hewitt as “pretty unanimous” for leaving parking enforcement on the board.

A voice of some dissent came from Clark, who said, “Just because I can have a baby, I probably shouldn’t – that’s my concern about all this.” The discussion paused while people got their laughter worked out.

Turning more serious, Clark asked for direction from Pollay: “When do the horns need to be louder? When do we need to say a little louder that parking enforcement might be a good idea, but we have to remember these other mission issues?”

Pollay indicated she’d provide the direction Clark asked for. Parking, she said, had been used up to then to support the mission of the downtown – from supporting development downtown to enabling special events to happen.

Outcome: Parking enforcement stayed on the list.

DDA Retreat Part I: (Term Sheet) Code Enforcement

Roger Hewitt described community standards code enforcement as the “outside codes” – sidewalk ordinances, trash removal, sandwich boards, cafes. It’s now enforced on a complaint basis. The idea is that if the DDA were in charge, there’d be more proactive work to get compliance from business owners instead of just calling them up and telling them they’re going to get a $500 ticket.

Many of the concerns about parking enforcement blended into the discussion about community standards. Joan Lowenstein clarified that even if the DDA took responsibility for community standards enforcement, the city would still need community standards officers for the area outside the DDA district.

Hewitt confirmed that there were certain areas that the DDA had “no desire whatever to be involved in.” For example, if someone doesn’t mow their lawn, the grass gets too tall, and someone calls in a complaint – the last thing the DDA wanted to do was to send someone out to tell them to cut their grass. The DDA would do code enforcement only inside its boundary, Hewitt said.

Keith Orr expressed concerns that the DDA didn’t have a history with the city on code enforcement the way it did with parking system management. Also, he said, code enforcement set up the DDA to be “the bad guy” in ways that were counter to the DDA’s mission. He gave as a specific example the case of sandwich sign boards – the DDA viewed them as positive, but the city’s ordinance prohibited them. [The city's ordinance on sidewalk occupancy was just recently revised to allow sandwich sign boards.]

John Mouat identified as a concern possible confusion among the public about who to call for a code violation. Leah Gunn said she’d prefer to think of the DDA as in the “service business,” not the “enforcement business.” She thought it would be more useful for the DDA to help businesses get their graffiti removed than to write tickets for graffiti.

When the brief discussion on community standards code enforcement looked like it would quickly be moved to a straw poll vote, Hewitt asked for an opportunity to elaborate. He cited his experience as the owner of downtown businesses in the campus area, which have problems that other parts of the downtown don’t have. He identified “eyes on the street” as essential, but that wasn’t happening.

Lowenstein suggested that DDA parking enforcement contractors could call police in the event of code violations, as well as infractions like aggressive panhandling. Code enforcement was much different from parking enforcement, Lowenstein said. In legal terms, she said [Lowenstein is an attorney], you just needed someone to write a ticket, and if somebody doesn’t pay, the fine goes up. With code enforcement, she said, there’s a warning and then a 24-hour period, and they can go to court and challenge it. It starts getting “legally much messier” than the parking enforcement.

Keith Orr mentioned that some of the more ambitious visions of the Main Street BIZ (Business Improvement District), which had included eyes-on-the-street people, had to be scaled back because the size of the district was relatively small.

On the question of code enforcement, there was no support indicated on the DDA board for leaving the item on the white board – Hewitt joked that he’d abstain.

Outcome: Code enforcement was wiped from the list.

Later in the retreat, Newcombe Clark suggested adding downtown police patrols to the list. The ensuing discussion focused on the fact that it might fall into the general category of code enforcement or services. The conversation did not gel around any particular perspective, and it was allowed to stay on the board, but given the unclear status of sentiment on the issue, Keith Orr called it “on the list but in suspended animation.”

DDA Retreat Part I: (Term Sheet) City Services

Roger Hewitt described these services as largely having to do with park-type maintenance activities – tree watering, pruning and the like. These are the kinds of activities that are easy to curtail when budgets are under stress.

Sandi Smith introduced as relevant to the issue of service provision the newly created Main Street BIZ, which would be providing some level of additional service – primarily in the form of sidewalk snow and trash removal, and graffiti removal.

John Mouat wanted to know how much the downtown cost the city for services, compared to other areas of the city. Susan Pollay told Mouat there’d been an effort in 2005 to analyze that – it was the source of the estimates included for various activities on the term sheet. However, Pollay said, it had been asked in terms of cost per area, not cost per resident. The cost for trash pickup – at five days a week – sounds expensive, she allowed, but with 2,800 downtown residents, that was actually less expensive than providing trash pickup once a week out in the area near Weber’s Inn, where she lives.

Leah Gunn noted that it wasn’t just downtown residents who needed to be factored in – there were also commercial establishments who paid taxes as well. Pollay supported Gunn’s point by saying that there were, in addition to 2,800 people who lived downtown, 10,000 people who worked there.

Mouat framed the question as whether the DDA wanted to fight the city to provide the downtown’s fair share of services, or if they wanted to just give up on that and pay for it themselves. He wondered if it meant the DDA would take over the services or “enhance” the services that the city already does.

Hewitt noted the idea was that if there were savings to the city, that amount would be deducted from whatever agreed-upon amount the DDA paid the city as part of the parking agreement.

Noting that the cost of all the services being contemplated was $100,000 a year, Gunn said that as her good friend Karl Pohrt would say, “This is chump change.” If it can be done and done right, is it worth the investment?

John Splitt asked if the idea was to reimburse city staff for doing the work or if they would contract with Republic Parking to do the work. Pollay indicated that she’d have to hire a landscaping contractor. Smith indicated that this, too, would be a union issue, because there were already city workers who performed those tasks. Joan Lowenstein indicated it was a somewhat different issue, and “more surmountable” because the tree trimming activities took place throughout the city.

Mouat asked Pollay directly if she felt that taking on the responsibility was within her world and her staff model. In response, she said the DDA had capacity to do things like install a whole row of new trees. That was something the DDA has capacity to do and they had done it well. Ongoing maintenance, however, was something the DDA had no current capacity for. There is no mechanism in the organization that provides a way  to monitor whether trees are getting watered.

Gunn asked about Republic Parking and their landscaping. Pollay replied that she wrote a check to Republic Parking and she did not do anything beyond that. Lowenstein said that conceivably the DDA could contract with a landscaping company – something that Pollay had already mentioned. Pollay said she was responding to the question that Mouat had asked, which was whether the DDA had the capacity to take on ongoing maintenance.

Pollay said the DDA is far better equipped to take on one-time capital improvements than it is for ongoing maintenance. Gunn didn’t agree, saying they were already doing wonderful landscaping through their parking contractor. Pollay countered by saying this was limited to the areas adjoining the parking structures. Gunn suggested that it would just mean expanding the role of Republic Parking. Pollay replied that she would have to manage it. She indicated that she would do anything the board asked her to, but that managing it, she didn’t feel, was a good use of her time.

Lowenstein pointed out that Pollay didn’t have to worry about the parking, because Republic Parking handled that. Similarly, the landscaping contractor would take care of it and report to the board every month.

Mouat noted that the additional challenge would be to make sure that the contractor was doing its job by walking around and looking at the work.

Lowenstein said she thought that there was some model they could find to make that work. Landscaping was the kind of thing that people mention – dead trees on Washington Street, for example. If it’s feasible, she said, they should find a way to do it.

The issue of the “hold harmless” language for services the DDA would provide generated some discussion. Elsewhere in the term sheet, there’s language that says the city will be held harmless with respect to parking fine revenue – that is, the city wouldn’t receive less than it does now. In the services section, it’s the DDA that is to be held harmless with respect to the cost of the additional services the DDA would provide.

Smith noted that an important question was whether the amount would be calculated based on the cost savings by the city or the cost to the DDA. The city, she said, would argue that their costs wouldn’t go down by as much as the DDA was spending, because the city already had the employees and equipment in place.

Newcombe Clark emphasized it was important that there be some financial consideration established with respect to the amount spent on services subtracted from payments that the DDA makes to the city.

Mouat suggested that it was perhaps not an issue important to the parking agreement, but rather could be added to the DDA’s capital improvements committee work list.

Outcome: The results of the straw poll was to leave services on the white board as term sheet items.

DDA Retreat Part I: Village Green

In addition to the main term sheet items, other items were added to the white board at Newcombe Clark’s request. Clark  noted that the obligation the DDA had to the Village Green City Apartments project at First & Washington – which has not moved forward yet – had a significant impact on their budget. [The DDA is supporting the project with a $9 million bond.] With the need for the city council to extend the site plan approval coming up, there was an opportunity, Clark said, to either abandon or renegotiate the extent of the DDA’s obligation.

In addition, Clark wanted to look at permit fees and bond issuance fees that the city charges the DDA for its projects.

Clark characterized the situation with Village Green as a “grant that doesn’t expire.” He said he was in no way saying “go away” to Village Green – he’d like to see the building built. Right now, however, there was no fire under them to build it. Instead, he said, Village Green was building elsewhere [Minneapolis and Chicago] because they’d not been pushed to build here.

Based on a phone interview with The Chronicle earlier in the week with Village Green, the Minneapolis and Chicago projects could move forward due to the fact that financing is easier there than in Michigan – even factoring in the positive impact Ann Arbor itself has. Village Green will be meeting with city officials in the coming weeks to talk about getting an extension to the City Apartments site plan.

Clark suggested that the money that’s due to come from the DDA could be switched from indefinite status to the DDA’s standard two-year time limit on such grants. The DDA’s contribution supports the construction of a parking deck integrated into the building which will be, in part, accessible to the public.

Clark said the DDA would be building a deck that it didn’t actually like, plus have to bond for the money, plus pay the city’s bond issuance fee, and permitting fees. All that, Clark said, “just gets my goat,” as far as better financial planning. This was a “weird arrangement” that had now been extended a couple of times without adjusting the key element that could be used as a negotiating tactic. It needs some deadline, said Clark.

John Mouat asked what the impact of not having the parking in that part of town would be. Susan Pollay noted that it was a functioning parking area already – the parking structure there had been demolished and is now used as surface parking. A lot of the issue would be that the apartments themselves would create additional demand. She said she did not feel it addressed a critical need for parking in that area of town.

Roger Hewitt said that the west part of downtown was not an area that had any shortage of parking and that he’d personally never been “wild” about building parking there. “We don’t like the design and we’re not in charge of building it,” he said.

Pollay noted that the goal of the parking for Village Green was not parking per se, but rather for the 146 new apartment units with the 250 new downtown residents it would bring.

Pollay said she didn’t see it to be part of the mutually beneficial arrangement, but that given there would be a point of contact between the city and the DDA, it could be brought up.

Clark countered that he felt it was a part of the mutually beneficial conversation, because it would “buy some consideration” for the city to fix the problem of the uncertainty that the DDA had in its budgeting due to Village Green.

Pollay clarified that the issue was to add a deadline.

Mouat noted that there was a lot of interest among property owners along the block to see the whole block redeveloped. He said he felt that there was something better out there than Village Green. Keith Orr commented that there’s no way they could think about something else unless there was a “sunset” on the DDA’s commitment.

Pollay, noting that there were members of the press in the audience, said she wanted to bring the conversation back to what she knew the board members really wanted to say: There’s been a process and a very good developer had been selected from a whole list of others. It is a project with substance and that the neighbors feel good about, with a site plan approval. It was a project the DDA also felt very happy about, she concluded.

Clark confirmed that he wanted Village Green to happen. And Orr concurred, saying it was a matter of a deadline helping to make sure that it did happen.

Outcome: Village Green as an issue stayed on the white board, as did the general issue of how bond issuance fees and construction permitting fees were calculated for DDA projects.

DDA Retreat Part II: General Mission, Boundaries, DDA Role

The item on the term sheet generating the most interest was the part that would establish the DDA as the entity responsible for developing city-owned land in the DDA area. In addition to the term sheet item itself, the board members covered topics like their general mission and where boundaries should be.

DDA Retreat Part II: Mission vs. Capacity

Roger Hewitt suggested that the DDA had the ability to do things in four main areas:

1. capital improvements, construction
2. operational things – e.g., running parking structures
3. grants and organizational support
4. planning and development

Sandi Smith asked: “Is this what we do, or where we’re going?”

Out of some brief conversation emerged the idea that these points described the DDA’s capacity – what it was capable of. That, Susan Pollay said, was different from a description of the DDA’s mission. “‘What is the purpose of us?’ is different than ‘What are we capable of?’” said Pollay. Why were we created? she asked. The answer was to attract new private investment and to strengthen the downtown, she said. She’d printed out the DDA’s mission statement and tacked it to the wall before the retreat had started:

The mission of the Ann Arbor Downtown Development Authority (DDA) is to undertake public improvements that have the greatest impact in strengthening the downtown area and attracting new private investments.

Later in the meeting, Pollay said that the DDA had “the capacity to do a whole lot of things,” but she wasn’t sure the DDA should do a whole lot of things. They needed to do everything in connection with the downtown.

Newcombe Clark reacted by saying, “We were created to build One North Main.” Pollay responded to Clark saying, “We also built Tally Hall at the same time, so we’re a lot more than that.” The DDA is here to attract private re-investment, she stressed. The question, she said, was not whether the DDA had the capacity to do code enforcement. The bigger question was why would they do anything of these things. The idea was to get an outcome with a stronger downtown that has more buildings, more people, more businesses, more economic development.

Clark suggested that the metric for that was to grow the tax increment finance capture (TIF). Pollay rejected that as the only measure. Investment was the key, she said, which included an existing building that now has a new tenant when it previously sat empty. Clark suggested that it did, however, have to do with growing the value of downtown in a financial sense in a general way, even if TIF was not the measure of that.

Joan Lowenstein characterized the TIF as a “means to an end.”

Clark brought the discussion back to the “hold harmless” language in the term sheet that required the agreement to hold the city harmless with respect to revenues. If the DDA was striking an agreement just to save the city of Ann Arbor some money or to save politicians some political capital, then that did not necessarily grow the financial value of the downtown. Spending more money than they were bringing in was counter to that.

John Mouat said he didn’t think it was as simple as growing the TIF or just economic development. It had to do with vibrancy and attracting young people and making Ann Arbor the best place it can be – a cool downtown, he said.

Mouat suggested that the right focus was to ask what the DDA was able to do and what its strengths as an organization were. He said he felt that the DDA’s strength was that it was a small organization, with a high quality staff and board. He felt that the DDA fit into a niche and the question was how to use that effectively. Leah Gunn picked up Mouat’s thread and said she’d describe the DDA as “nimble.” As an example, she gave the on-street bike racks that the DDA had just done and now they’re jammed full, and “it’s cool, and people like it.” It was a small example, she allowed, but it added to the quality of life downtown.

At one point Pollay characterized as one of the DDA’s strengths that it was a very “flat” organization – there were not layers and layers of bureaucracy.

Mouat echoed Gunn’s idea that the subjective, quality-of-life issues were a big part of what the DDA could address.

But Clark questioned whether the DDA board – as non-elected officials – had the ability to make subjective, quality-of-life judgment calls. It might be more appropriate to approach it objectively: How do you build a building? What do the data show? There are some people, he said, who “like Ann Arbor a little dingy.” So if the downtown is a “whitewashed and Disneyland downtown,” he said, they’ll say that’s not the Ann Arbor they want. He called the claim of responsibility or capacity to make community value judgments “dangerous territory.”

Gunn indicated that was not what she meant. And Pollay noted that the DDA had been around for 20 years and had done things like transition State Street to two-way traffic, put in new sidewalks, and they were currently undertaking the Fifth and Division streetscape renovations. None of that, Pollay said, had taken place in isolation from community conversation and conversation with the city council. If the DDA had not been there, she suggested, downtown Ann Arbor would look a lot like Lowertown does today. [Its significant feature is an empty undeveloped lot.]

DDA Retreat Part II: Change Boundaries?

Clark picked up on the reference to Lowertown by saying that the Ypsilanti DDA looked at its district boundaries every few years to evaluate whether they were in the right place. He asked if Pollay thought the Ann Arbor DDA could re-evaluate its district boundaries. Pollay told Clark that if he felt the DDA was finished with the district it had, then it should absolutely be on the list.

Pollay asked Clark if he wanted the boundary issue added to the white board. Gunn kidded Pollay, “Oh, don’t you dare!” Clark responded immediately by saying, “That’s the problem we have here, right? For the first time in our history, we have tied our zoning to our [TIF] district. And our district was basically made to deal with racial steering issues in the 1970s and what happened in that [northeast] corner up there.”

By way of background, the northeast corner of the Ann Arbor DDA’s TIF district includes the Ann-Ashley parking structure, built in part to provide parking for One North Main residents. Many of the residents who lived in the houses that were removed to make way for the parking structure were African American.

Clark grew up near that neighborhood. He reported at the retreat that he remembered being four years old and watching all his neighbors get kicked out their houses, so that the Ann-Ashley parking structure could be built. He noted that no one remembers that. He called it hurtful and sad – but it had happened and now the city has Ann-Ashley and One North Main, and “… we’ve moved on. Cities rise and fall and shake and burn and flood.”

“Things are better where we spend our money, but when we put [boundaries on the white board list], people are going to freak out,” he said. “Ypsi and other DDAs look at it every couple of years.”

Pollay allowed that it was a valid question. When she’d been in Milwaukee attending a conference, she said that the question had come up: What if the DDA had expanded its boundaries into the Lowertown area? Every wonderful downtown she’d seen lately, she reported, really cherishes its river – the river is a great asset and they’d done a good job with that in Milwaukee. It was a “what if” conversation, she said, and people immediately thought of the controversy that would ensue. Even thinking of expanding boundaries was only possible, she said, because they had been outside of Ann Arbor and were not concerned about the politics.

John Mouat characterized the Lowertown area and the North Main stretch as really exciting from a design point of view. [Mouat is an architect.] He characterized the potential of those areas as unrealized.

The boundary issue came up again when Clark wondered whether providing different levels of service inside the DDA district boundary would prompt property owners to ask to have the boundary lines redrawn, so that their businesses could be included in the district. That was the difficulty, he said, and people would “freak out” if there was discussion about redrawing the boundary.

Gunn addressed Clark’s concern by saying that if the boundary were to be redrawn, then any municipal authority that had its taxes captured by the DDA’s TIF would have to have a new district boundary approved by their governing bodies. Gunn ticked through the other entities whose taxes get captured and when she mentioned the Ann Arbor District Library, she nodded towards Josie Parker, director of the AADL, who was seated in the audience.

Parker’s an interested party to the DDA conversations, not just because of the library’s downtown branch. To the extent that payments by the DDA to the city could involve revenues from the DDA’s tax-increment finance district, Parker told The Chronicle before the meeting, she wanted assurance that any excess TIF revenues were distributed proportionally, according to state statute, to all the taxing authorities whose tax levies were “tiffed” – that is, captured by the DDA. The Ann Arbor District Library is one of those taxing authorities, along with the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor Transportation Authority.

Gunn said she did not think that the other taxing authorities would embrace the idea in the current economic climate of giving the DDA additional taxes.

DDA Retreat Part II: (Term Sheet) Downtown Development

Roger Hewitt described the section of the term sheet addressing development as purposely vague. But the point there, he said, was to focus on city-owned surface parking lots in the DDA district. There’s a desire on the part of the city and the DDA in seeing those lots developed in some manner or other. The city, however, had not been very successful in doing that, Hewitt said. The reason was that the city did not have the personnel or the expertise to do development, and they wound up reacting to situations. He described the city staff as not having RFP experience in this sort of thing.

The idea on the term sheet was that the DDA would be the primary public entity in charge of ensuring that downtown surface parking lots would be developed. The DDA would be in charge of the planning process, the public hearings, the RFP process. All of this would need the city council’s approval – it was clear, Hewitt said, that the city council was unwilling to just turn over the whole process to the DDA and walk away from it.

The DDA would come up with an overall master plan of what should happen on those lots and what should take place. Over a period of years, they execute that plan – all with city council approval on a step-by-step process. Although the details of how that would work would not be included in the parking agreement, Hewitt said that it could be addressed in the shorter term by an accompanying resolution from the city council requesting that the DDA undertake those activities.

Leah Gunn noted that every idea they’d received from developers over the years had included using either tax money or parking money from that development. When developers come in to build what they want to build, they want to use public money – and that had been a difficulty for her, she said.

Hewitt said that in the past they’d taken a one-site-at-a-time approach. With a master plan for all the sites, it would be possible to distribute the goals for the community across the various sites, instead of cramming everything all on one site – whether those goals are for open space or affordable housing.

Susan Pollay reviewed some of the history related to the DDA’s past role in downtown development when it was far more active than it is today. For the Ashley Mews project, she said, the DDA had facilitated the development of the RFP and the interview process. The city had had a strong interest in redeveloping the property at Main and Packard [site of the Ashley Mews project]. The city had wanted to see a good sale price for the land as well as some affordable housing units. The DDA had played a functional role for process, and towards the end of the process, she said, the DDA had helped with some gap financing to allow the developer to be successful and the city to meet the goals it had set out for the project.

For First and Washington, Pollay said, the DDA had previously developed an RFP that had foundered on height restrictions, and the developer was not able to make the project work on a smaller scale.

The DDA had also played a role in developing the strategic economic modeling that went into the analysis of the Kline lot as part of what’s called the 3-Site Plan. If the DDA wanted to see a ground-level grocery store, what would a developer want to see on the floors above that? At that time [the early 2000s], Pollay recalled, “retail condominiums” were seen as a possibility for keeping rents affordable. That economic modeling went into the formulation of the RFP for the 3-Site Plan.

In the last five years, however, Pollay said that the DDA’s role had been more passive and reactive. She cited several development efforts for city-owned property that the DDA had not led – none of which have resulted in a built project. The DDA had not played a role with 415 W. Washington. They had not played much of a role with the former YMCA lot at Fifth and William [William Street Station – a project that the council eventually pulled the plug on]. And now the DDA was playing a very limited role with the development of the Library Lot. They’d been told that development needed to be a city function – she said she accepted that and called it appropriate.

But what had been lost along the way, she said, was the idea of someone “owning” the process. For the city, it was one of many, many things on their plate, whereas this had been the one thing that the DDA could focus on. “You know how you guys are, ” she said, “you want to build a parking deck, you guys do it.”

What’s been lost in the last five years is someone to follow through and own the outcome of the process, Pollay concluded.

Sandi Smith said she’d like the DDA to map out the critical assets the city has and create a sophisticated set of GIS overlays, that include the historic districts, the public land and all the rest of the information that developers might want to see. Where are transportation nodes and telecommunications fiber conduits? That would be a great tool that would precede readiness, to say to the city that the DDA was ready to look at development. The idea, she said, was to create something publicly consumable by developers. [Some of this mapping material is available as a part of the city's online Data Catalog.]

Newcombe Clark said that his whole head was into that – and the conditions changed every six months, he said. Take the Palio lot, he said. It was currently worthless with respect to the code requirements of an 8,000 square foot lot, which will never be developed, unless it’s subsidized. So an easy way to approach the development issue would be to start buying lots from the city or the county. Just spend DDA money on buying the land and building something, he said. The public process had already determined the zoning for the lots.

Clark suggested that the city council could then just tell the DDA which lots they were willing to sell or which ones would be the most politically tenable. Clark suggested that if the DDA managed to build the Palio lot into “something cool” and put it on the tax rolls, then the city council might say, “Oh, the DDA is actually good at that.” And then maybe the city council would sell the Kline’s lot to the DDA, or the YMCA lot.

Smith questioned whether it was necessary for the DDA to actually own the property.

Clark replied that he was trying to establish financial consideration [in order to create a binding contract between the city and the DDA]. Smith questioned whether financial consideration needed to be a goal. Smith came back to the “mutually beneficial” nature of the arrangement. Financial consideration did not need to come from each and every item on the term sheet list, she said.

Gunn picked up on Smith’s suggestion of mapping data, and summarized it by saying it was an investment in aggregated information, which would not be proprietary: “We would say to one and all, ‘Here it is, bring us your ideas.” If that was what Smith was talking about, Gunn said, she thought it was “brilliant.”

John Mouat said he liked that idea because it took the burden off of each developer to do all the due diligence.

A larger challenge, Mouat said, was the difficulty of undertaking development in Ann Arbor – the community opposition was always a factor. He was skeptical that the DDA could do a better job than the city. He said he felt it was important to approach it in a totally different way. The fundamental flaw was thinking of the parcels in terms of developers – developers were not necessarily the people to get ideas from.

Mouat suggested that they marshal their energies in the area of “economic development” – attracting businesses, attracting the next Google, and other start-up companies. Mouat said he felt like it would be a more exciting and palatable way to approach development. The vision should go beyond a building being built. A developer putting up a building on speculation had not been very successful in Ann Arbor. He suggested banding together with SPARK – the area’s economic development agency – and other organizations and figuring out what niche the DDA might fill in that world.

Gunn came back around to the idea that it would be not just physical assets, but quality-of-life assets that were aggregated into the information set.

Pollay wanted to know if they were talking about just attracting companies to existing buildings or if they saw this as a way of promoting the construction of new buildings. Mouat said it didn’t matter to him if it meant that a property would be occupied or if a new building got built. He saw it as a downtown-centric overlay to what SPARK did.

Pollay characterized that as business recruitment, as opposed to downdown development. At that point, Mouat said that’s what he felt development meant – buildings were simply an outcome of what people want to do. He wanted the DDA to become more people-centric, not infrastructure-centric.

Mouat also said that downtown development in the form of constructing new buildings would happen only when there was demand. Clark assured him that there was plenty of demand – that was a unique “problem” faced by Ann Arbor, that people actually wanted to invest here.

Mouat replied that there would need to be more “sex appeal” to a project than just a building. He came back around to integrating with SPARK’s efforts and included the University of Michigan’s Business Engagement Center as well. Gunn pointed out that SPARK was funded in part through tax money, so they would be a logical partner.

Hewitt said he was favor in doing something fairly dramatic. But whether it’s amassing a large amount of data or partnering with SPARK or developing master plans, it took a huge amount of staff time and effort. The important point, Hewitt said, was that it was a huge new direction – but before he finished that thought, Pollay interjected, “No, it’s an old direction.” The question Hewitt then asked was, “Do we have the capacity?”

Pollay answered Hewitt by saying, “I think that’s what I do best – and I haven’t been doing much of it.” She gave the example of the transportation and parking plan that the city had asked to the DDA to complete recently and which she and her staff had turned around in about four months. It was higher-level work – not walking around making sure that trees were getting watered. That management of higher-level work, and getting the best work out of the board, was the value she felt she added to the organization. The committment of time for working on development did not feel like a burden to her, she said, because it was central to the reason why the DDA existed.

Clark followed up on Pollay’s comments by naming some past board members who were more a part of the development world: “It was a lot easier with [Fred] Beal, [Rob] Aldrich, and [Ron] Dankert, and [Ed] Shaffran, who brought to the table an immense amount of knowledge,” he said. It was not coincidental, Clark said, that it was during their tenure on the board when some buildings got built.

There was no control over the constitution of the board, Clark said, without intense lobbying of city council. [The DDA board positions are nominated by the mayor and confirmed by the city council.] Clark said he did not think the current board had the skill set to take on development as a central task.

Pollay suggested that the mayor had a good ear for what was needed. So she felt if they told him that they needed someone with development strengths or a finance background, the board appointments could go in that direction. Gunn rejected the idea that appointments were the approriatate purview of the DDA board – that was the mayor and the council’s decision.

Keith Orr said that the development part of the term sheet was worth everything else. The mechanisms to do that – purchasing land, creating information systems – those are all different aspects of it.

Hewitt came back to the point that the development piece would not be part of the parking agreement contract, but that there was support from city council for the concept.

Joan Lowenstein asked what specficially the DDA was asking for with respect to the development item on the term sheet. The ensuing discussion suggested that it would mean the DDA would be in charge of any RFP process for the development of city property.

Outcome: The result of the straw poll for leaving the development item in the mix for future discussion was a clear consensus to keep it.

Miscellaneous

Some people who attended the DDA board’s retreat but who did not address the board included: Josie Parker, director of the Ann Arbor District Library; Sabra Briere, Ward 1 city council representative; Maura Thomson, executive director of the Main Street Area Association; and Kyle Mazurek, vice president of government affairs at the Ann Arbor Area Chamber of Commerce.