City, DDA Continue to Talk Parking, Taxes

Ann Arbor Downtown Development Authority board meeting (April 6, 2011): Since June 2010, the city of Ann Arbor and the Ann Arbor DDA have been negotiating a new contract under which the DDA would continue to operate the city’s public parking system.

While the city and the DDA have achieved much agreement on the non-monetary details of the arrangement, Wednesday’s board meeting left the financial piece still unclear.

The board discussion included a focus on the contrast between the combined fund reserve of the DDA – which includes those funds it collects as a tax-increment finance authority – and the reserves of just the public parking fund. Sandi Smith, who’s a DDA board member and an Ann Arbor city councilmember, stressed throughout the conversation that it’s not just the overall fund balance, but the public parking fund balance itself that needs to be monitored.

Last week, the board had come to a consensus that the public parking system could absorb a payment to the city equal to 16% of gross parking revenues in every year of a 10-year contract, which represented a revision upward from its previous position of 14% in the first two years, followed by 15% in subsequent years.

After lengthy back-and-forth, the only consensus reached by DDA board members was that they were not prepared to revise their position upward (again) to meet the city’s request that the city be paid 16% of the public parking gross revenues in the first two years of the contract, but 17.5% in remaining years. Mayor John Hieftje, who serves on the DDA board, was the lone voice of support for that position.

The mayor also found himself somewhat isolated on another issue in front of the board at its Wednesday meeting – the only action item on the agenda. The board voted to sign a new, more favorable lease agreement for its roughly 3,000 feet of office space at 150 S. Fifth Ave. for a term of five years.

Although the mayor voted with the rest of the board in authorizing the lease agreement, he had announced at the city council’s Monday, April 4 meeting that he would be asking his fellow DDA members to consider moving into space that’s currently being renovated in the city hall building. Two days later, at Wednesday’s DDA board meeting, the mayor appeared to understand that there was little enthusiasm on the board for the move, based partly on the fact that it would cost the DDA more in the short term.

At the meeting, the board also heard its usual range of reports and communications, including an update from DTE on the addition of a new substation near the Broadway bridge, to meet increased demand for electricity.

City-DDA Parking Contract: History

The current 10-year contract, under which the DDA operates the city’s public parking system, expires in 2015 – with an option for the DDA to renew through 2018. That contract calls for the city to be paid $1 million in “rent” per year out of the public parking system, plus additional money into the street repair and maintenance fund totaling roughly $850,000.

A provision in the contract allows for the city to request that a double payment of $2 million be made in any one year out of the parking system, provided that the total amount in rent paid over the contract period does not exceed $10 million. When the contract was signed in 2005, then-city councilmember Leigh Greden told the DDA that it was only due to the dire financial condition of the city that year that the double payment was being requested in the first year of the contract – the double payment was not assumed to extend beyond that first year.

However, the city has requested the double payment of $2 million over each of the first five years of the contract. And last year, the DDA board authorized an additional double payment of $2 million not required by the contract, bringing the total rent paid to the city out of the public parking system since 2005 to $12 million. [See Chronicle coverage: "DDA OKs $2 million Over Strong Dissent"]

In addition to that money, over the last two years the DDA has agreed – outside the context of that contract – to donate proceeds from the 415 W. Washington and Fifth & William (the old YMCA) parking lots to the city. That move was motivated by a desire of the DDA to forestall the installation of parking meters by the city of Ann Arbor in residential neighborhoods to generate direct revenue to the city’s general fund budget. The city made that move as a part of its FY 2009 budget, approved in May of that year. By providing revenues that would at least partially replace money the city thought it could generate through meter installation, the DDA reduced the pressure to install the meters.

The DDA opposed meter installation at those locations, partly due to skepticism that they would actually generate very much revenue for the city, partly based on the fact that the DDA believed the city did not have the authority to install such meters, and also that the residential locations were unsuitable for parking meters.

[More background on the meter installation in previous Chronicle coverage: "City-DDA Parking Deal Possible"]

City-DDA Parking Contract: Negotiations, Outline

The negotiations between the city and the DDA are being handled by two “mutually beneficial” committees – one composed of Ann Arbor DDA board members and the other made up of city councilmembers. On the council’s committee are councilmembers Carsten Hohnke, Margie Teall and Christopher Taylor. Serving on the DDA committee are Gary Boren, Russ Collins, Roger Hewitt and Sandi Smith. The committees began meeting in public view in June 2010, after a “work group” had met privately starting in January of that year.

The original target date for a completed new parking agreement was Oct. 31, 2010. The two mutually beneficial committees had begun meeting on a once-monthly schedule, but at the urging of Susan Pollary, executive director of the DDA, they increased their meeting frequency to twice monthly, beginning in late summer 2010. And over the last several weeks, the two committees have been meeting at 7:30 a.m. every Monday morning trying to finalize details of the contract.

The work group that had met out of public view in the early part of 2010 produced a term sheet in spring 2010 to serve as an outline to the negotiations. It was on the basis of that term sheet that the DDA agreed to the extra double payment of $2 million last year. [See Chronicle coverage: "DDA OKs $2 Million Over Strong Dissent"].

A key concept of the term sheet was that the city would be held harmless financially. Other main points of the term sheet included [.pdf of complete term sheet]:

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. [...]

The final point of the term sheet was, to some extent, addressed with the passage of a city council resolution on April 4, which tasked the DDA with leading a process to explore the future use of four parcels located in a rectangle bounded by Ashley, Division, Liberty, and William streets.

The middle two term sheet points – non-parking code enforcement done by the DDA and additional service enhancement to be performed by the DDA – were shed from the discussion fairly early in the negotiations.

The first term sheet point – that the DDA would enforce parking rules and write tickets – also did not make it into the draft contract. But vestiges of that idea remain in different places in the draft. The basic idea was that the DDA would like to have more direct influence on setting the parking policy – rates and hours of enforcement – and would like to maintain a more systematic communication with the city about parking policies. This basic notion was expressed at a city council meeting on April 19, 2010 when the DDA delivered a parking report to the city council. That parking report had been prompted by a Dec. 21, 2009 city council resolution that had contemplated, among other things, extending hours of parking meter enforcement past 6 p.m. – the evening enforcement provision did not pass on that occasion.

Some key features of the new draft contract include:

• Parking rates/hours to be set by DDA. The city council would not have a veto. [Currently the city council holds a veto on rate changes.] The contract stipulates that rates won’t be changed permanently without first: (1) announcing and providing written communication regarding details of the increase at a DDA board meeting; (2) at a subsequent board meeting, providing all members of the public a chance to speak before the DDA board on the matter – a public hearing; and (3) delaying any vote on the rate change until the board meeting following the public hearing.
• DDA to assist with directing parking enforcement. The contract calls for a Standing Committee to be formed that will meet for regular consultation about parking enforcement. The committee will consist of the executive director of the DDA, the parking manager, deputy police chief, community standards supervisor, and the city’s public services area administrator. This addresses the concern expressed by the DDA that while it already had the authority to set hours of enforcement (for example, for later in the evening), it could not actually schedule community standards officers to do the enforcement. [Currently, many downtown parkers pay for meters past 6 p.m. even though the meters aren't currently enforced that late.]
• City to report information to the DDA. The contract would call for the city to provide regular reports on its enforcement activity – data like how many citations have been issued and in which zones. The contract would also call for the city to provide reports to the DDA on its street maintenance activity in the downtown.
• Parking area defined. The contract provides a map designating exactly which areas the DDA has authority to decide placement of parking meters. Not included in the DDA parking area are any of the residential parking permit areas – a program over which the city will maintain its current control.

Leaving aside the financial aspects, the two mutually beneficial committees appear content that the new contract as drafted provides a level of clarity and communication for the operation of the public parking system that is a great improvement over the old contract.

City-DDA Parking Contract: How Much Money?

The two committees reached early agreement about the structure of the financial arrangement by which the city takes money out of the public parking system: It should be a percentage-of-gross formula that would aggregate all of the payments currently made to the city out of the public parking system. They disagree about how large the percentage should be. [Not included in the percentage-of-gross is a $500,000 payment the city receives from the DDA's TIF capture, which pays for part of the bonds issued to finance the city's new municipal center.]

On any of the percentage-of-gross scenarios, the city could essentially allocate its share of the public parking system revenues to whatever expenses it deems appropriate – its general fund, for example. But the city would presumably spend some fraction of the money on street maintenance in the downtown district – as a condition of the new contract, the city would be required to provide reports on its maintenance of streets where on-street metered parking is available. The term of the agreement has been discussed at varying lengths, but appears to have settled at around 10 years.

A fleeting part of the discussion in October 2010 were percentage-of-gross figures as high as 20% per year and as low as 10%. Fairly quickly, the city council’s committee settled into a position of 17.5%, except for the first two years of the contract, for which it was content with 16% – the 16-16-17.5 position.

The DDA’s committee consulted its full board at a Jan. 5, 2011 retreat, during which the board modeled the different percentage scenarios against its 10-year plan – a spreadsheet it uses to make financial projections. As part of any scenario, the DDA will be deferring some maintenance on the parking structures, in order to accommodate the city’s request for a new contract. The specific items to be deferred have been reviewed by the DDA’s engineering consultant.

All scenarios also assume that at least part of the down payment and bond payments for the underground parking structure currently under construction will be paid out of the DDA’s tax capture fund – its TIF fund. [During his campaign for reelection in 2010, mayor John Hieftje defended himself against criticism over the use of bonds to pay for the underground parking structure, saying the bonds would be paid from parking revenues. For discussion of the use of TIF in connection with payments to the city out of the parking fund, see "Column: Impact of City-DDA Parking Deal"]

At its Jan. 5 retreat, the board came to a consensus that the public parking system could absorb a percentage-of-gross figure of 14% for the first two years of the contract and 15% for the years thereafter – the 14-14-15 position. At the Monday morning mutually beneficial committee meeting on March 28, the council’s committee members told their DDA counterparts that they wanted the full DDA board to reconsider its view – the city was still committed to the 16-16-17.5 position.

So at an operations committee meeting two days later on March 30 – attended by 10 of 12 board members – the DDA board considered the city’s request and came to a consensus that the public parking system could absorb a payment to the city in each year of the contract equal to 16% of the gross parking revenues – a flat-16 scenario.

The following Monday, April 4, when presented with the flat-16 offer by the DDA committee, the city council committee insisted on its 16-16-17.5 position, and asked that the committee take its request back to the full board again.

So at its Wednesday, April 6 regular board meeting, the DDA board informally entertained that request, conveyed through the council’s committee, to rethink its earlier consensus compromise flat-16 position.

City-DDA Parking Contract: April 6 DDA Board – Taxes, Parking

At the April 6 board meeting, Sandi Smith – who serves on both the DDA board and the Ann Arbor city council – added to the mix of alternatives a proposal that would split a 10-year contract period in half: 16% of gross parking system revenues would be paid to the city for the first five years of the contract, and 17.5% would be paid in each of the five remaining years. It’s a half-and-half scenario.

In weighing how to give direction to Roger Hewitt – who was going to be meeting with the city council’s mutually beneficial committee on Friday, April 8 – the Wednesday board meeting discussion wound through familiar issues: (1) appropriate levels for fund balances; (2) the relationship of the DDA to the city; and (3) which fund balances matter.

Lodged firmly in the memory of DDA board members are remarks made by the city’s chief financial officer, Tom Crawford, at the Jan. 5, 2009 city council meeting, when the size of the Fifth Avenue underground parking garage was trimmed back by 100 spaces, so that it no longer extended down to William Street. [The reduced project means that additional construction would need to take place to achieve an underground connection to any future building on the old Y Lot or to the new Blake Transit Center, which is currently being designed.]

From The Chronicle’s report of the Feb. 17, 2009 Ann Arbor city council meeting:

Crawford reported that on looking at the DDA’s financial picture, he noticed that they don’t have a minimum reserve policy. He said he generally used 15-20% as a minimum reserve. In light of the need to maintain adequate reserves, he said that in his view the project is “not affordable with the plans they have.”

The 15-20% figure appears to be more of an ideal, whereas the practical recommended minimum range – used, for example, in the city’s own budget planning – is 8-12%. [More detail on the fund balance question in previous Chronicle coverage: "Ann Arbor DDA Barely Passes Budget"]

On the 16-16-17.5 scenario, the overall combined reserve balance across all of the DDA’s funds would dip to 7.4% of expenses in 2016, which is less than the lower limit of the 8-12% recommended range used by Crawford. On the flat-16 scenario, the lowest overall fund balance would be 10.9%.

At Wednesday’s board meeting, mayor John Hieftje responded to concerns about the DDA’s overall fund balance by reiterating his position that the DDA is part of the city. [This position was also apparent in his expressed interest in having the DDA move its offices into newly renovated space in city hall.]

Hieftje said the city is responsible for backing up the DDA. He compared the city’s role to that of a parent – the DDA is “like a child,” he said, whose debt the city must ultimately cover. He felt comfortable with the overall fund balances on the 16-16-17.5 scenario. Hieftje was also critical of the DDA’s conservative estimates of the growth of the TIF, citing the additional tax revenue the DDA would be capturing due to two specific projects – 601 S. Forest and Zaragon Place II.

Countering the mayor’s emphasis on TIF as a means by which the DDA could shore up its overall fund balances was Sandi Smith. At Wednesday’s board meeting she drew out a contrast between the overall fund balance, which she allowed was important to watch, and the parking fund itself. She’d made the same point a week before at the DDA’s operations committee meeting. The 16-16-17.5 scenario, she contended, made it impossible to use the public parking system as an economic development tool.

On any of the scenarios that begin with a 16% payment, the parking fund reserves would dip to zero in the first two years of the contract. In the city’s preferred 16-16-17.5 scenario, the parking fund reserves would stay below 8% from 2014-2018, with a low of 4.2% in 2015.

[Note: The DDA leases some private lots for public parking from owners other than the city; revenues from those lots are not included in the gross to which the percentage-of-gross would apply in the new contract. In spreadsheets compiled by The Chronicle using DDA data, this difference is reflected in two separate revenue totals – one for total revenues, and the other for revenues that don't include rent paid by the DDA to lease privately-owned parking lots.] [.pdf of flat-16 scenario] [.pdf of 16-16-17.5 scenario][.pdf of half-and-half scenario] [Google Spreadsheet]

Not a prominent part of the DDA board’s discussion on Wednesday was the idea – from the term sheet produced by the working group a year ago – that the city should be held harmless compared to the way it has withdrawn money from the public parking fund in the past. It has been a frequent point made by city council committee members in their discussions with their DDA counterparts over the last several weeks.

For the council’s part, of crucial interest are the first two years of the contract, because the city does its budget planning in two-year cycles – 2012 is the first year of a two-year cycle, and the budget for that fiscal year, which begins July 1, 2011, is now being prepared. Councilmembers point out that compared to previous practice, the roughly $2.5 million the city would receive in the first year (based on percentage-of-gross payment of 16%) reflects a difference of about $300,000 compared to what the city has historically received. That’s part of the reason they are keen to see that difference made up in the third year of the contract.

By The Chronicle’s calculation, for the nine years from 2012-2020, the city would receive about $26.5 million based on past habit and practice. That’s based on $2 million of rent plus an escalating payment into the city’s street repair fund, starting with $835,000 in the first year. That compares with $27.4 million the city would receive over the same period, based on the flat-16 scenario.

At Wednesday’s meeting, DDA board members did raise the question of the city’s need after the second year. Newcombe Clark asked on Wednesday why the city felt it would necessarily have a need for public parking dollars in 2020.

The week before, at the DDA operations committee meeting, Hieftje assured other DDA board members that he felt the recession could be over in four years time. Joan Lowenstein pointed out that this same argument, which he was using to assure the DDA board that their fund balances would be adequate, could be used to question whether the city would have a need for the parking dollars.

As Roger Hewitt expressed some urgency that he needed direction for the next meeting of the mutually beneficial committees, a straw poll was suggested. Hieftje was resistant to the idea, saying that Hewitt should glean his conclusions from the board’s conversation.

John Splitt, John Mouat, and Sandi Smith seemed to indicate they’d support a half-and-half scenario – 16% in the first five years and 17.5% in the remaining five years. Bob Guenzel said he felt that the flat-16 already reflected a lot of movement by the DDA from its previous position of 14-14-15, but wanted to give Hewitt some flexibility. Keith Orr also indicated he felt that in the spirit of mutual sacrifice, the DDA had come a long way to the flat-16 scenario. [Orr has for the last year consistently referred to the mutual sacrifice as opposed to the mutual benefit.]

Gary Boren –  who was running the meeting because Lowenstein, the board chair, was participating only by speaker phone – suggested that there was at least a clear consensus that board members were not prepared to meet the city’s request of a 16-16-17.5 scenario. With the exception of the mayor, all board members agreed that they were a part of that consensus.

City-DDA Parking Contract: Coda – Friday Morning MBC Meeting

Early Friday morning, April 8, the two mutually beneficial committees met again. It was intended as a replacement for the meeting the following Monday. Councilmembers Christopher Taylor, Margie Teall and Carsten Hohnke were greeted with the news that the DDA board members had reached a consensus that they were not prepared to meet the council’s request for the 16-16-17.5 scenario. So the Monday, April 11 meeting was put back on the calendar. [Later on the evening of April 11, the council is due to receive a presentation on the city administrator's proposed budget for fiscal year 2012, which starts July 1, 2011.]

Roger Hewitt stressed that he’d already gone back to his full board twice with the council’s request – in fully public settings – after first consulting with his full board publicly at a retreat. He urged the council committee members to do the same with their council colleagues. For her part, Teall said that the lower the percentage-of-gross revenues in the contract was, the more likely it was that the city would come back to the DDA and ask for additional money. Hohnke, who was participating by speaker phone, seemed piqued that Sandi Smith’s position was not supportive of the council committee’s position – she serves on both the DDA board and the city council. He asked pointedly asked what “councilmember Smith” thought.

Smith reiterated the same point that she’d made at the DDA board meeting, saying that the parking fund balance on the 16-16-17.5 scenario was too precarious, and that on her half-and-half compromise – 16% in the first five years and 17.5% in the second five years – the parking fund balance was able to eke out enough of a cushion that she felt more comfortable with.

At the next mutually beneficial committee meeting on Monday morning, April 11, the committees are expected to settle on a percentage-of-gross figure to present to the city council, which could see a vote as early as the council’s April 19 meeting.

DDA Lease Renewal

At its April 6 board meeting, the DDA’s only action item was an authorization to sign a new lease for its office space.

Under terms of its current lease, which expires on June 30, 2011, the DDA pays $26 per square foot for 3,189 square feet of office space located at 150 S. Fifth Ave. Under terms of the new lease, the DDA would pay $16.75 per square foot in the first year of the five-year deal, for a total of $53,415. After the first year, the amount would increase to $17.25, $18, $18.75 and $19.50 per square foot. There’s an option for an additional five-year term.

Mayor John Hieftje had announced at the April 4 city council meeting that he’d be inviting the DDA board to consider moving the DDA offices to newly renovated space in the city hall building. But at the Wednesday DDA board meeting, he indicated that he’d discussed the lease with DDA board member Roger Hewitt and understood that securing just a one-year renewal of the lease would mean agreeing to the less favorable terms of the current lease for that year.

In introducing the item to the board, Roger Hewitt noted that the DDA staff had reviewed alternative spaces, using the services of a broker, but had ultimately been able to negotiate a new lease with the current landlord, Weinmann Block LLC. Alluding to the mayor’s offer announced at the city council meeting on Monday, Hewitt noted that if there was a desire to move out of the space before five years is up, they had the right under the terms of the new lease to sublet the space.

Gary Boren chaired the meeting, because the board’s chair, Joan Lowenstein, was joining the meeting by conference call. And Boren held off on taking a vote on the matter until the mayor could return to the table – he’d left the meeting to take a phone call.

On his return, Hieftje indicated that he understood the circumstances and was willing to support the five-year lease at the DDA’s current location.

Outcome: Hieftje voted for the five-year lease extension, along with the rest of the board. Newcombe Clark recused himself.

Communications, Committee Reports, Commentary

The board’s meeting included the usual range of reports from its standing committees and the Downtown Citizens Advisory Council. Every board meeting also includes two opportunities for public commentary – one near the start of the meeting and the other at its conclusion.

Comm/Comm: Library Lot, Development Process

Ray Detter, reporting out from the Downtown Citizens Advisory Council, and John Splitt, reporting out from the board’s bricks and money committee, both noted the termination of the RFP process for the future use of the Library Lot, which the city council had voted on at its meeting two days earlier on April 4. [Chronicle coverage: "Column: Library Lot from Bottom to Top" and "Ann Arbor Council Focuses on Downtown"]

Detter said that “no tears were shed” when the CAC discussed the issue at their meeting the previous evening, which was attended by Ward 1 city councilmember Sabra Briere. [Briere also attended the DDA board meeting on Wednesday.] Detter said that the CAC supported the idea that the DDA would lead the planning process for the rectangle bounded by Ashley, Division, Liberty and William streets, which includes the Library Lot. That planning process was authorized by a city council resolution also passed at the council’s April 4 meeting.

The rectangle identified as the area of focus for the planning process reflected an amendment undertaken by the council at its Monday meeting. In reporting news of the unanimously-passed city council resolution, Roger Hewitt expressed encouragement that it was something to be referred to the DDA’s partnerships committee and that it had been an important point of the mutually beneficial committee negotiations. Mayor John Hieftje said it was a matter of prioritizing which parcels would get addressed first.

But board member Newcombe Clark questioned the narrowing of the focus – the original intent had been to take a comprehensive look at all of the city-owned parcels in the DDA district. He wanted to know why the specific area had been chosen.

Sandi Smith told him that it was about getting a council consensus. She noted that on the same evening, the city council had received a presentation on another downtown parcel, 415 W. Washington, which has its own process already. The sense of the city council, Smith said, was that it did not want to have the DDA start coming up with ideas for parcels that had processes that were already in place. She also said she felt that the rectangle of focus contained the greatest possibilities for development.

Clark wondered if there had been any discussion on “viability.” As an example, he said that given the zoning, size, geometry, cost of construction, demand, and rents in the area of the Fourth and Catherine lot, that might turn out to the most viable lot with respect to the goal of adding property to the tax base. He compared that with the Palio Lot, which is cramped, or the old Y Lot, where it might be difficult to reach an agreement on price – given that the city wants to recoup the money it paid for the property. He asked if any thought was given to the opportunities of all 16 of the city-owned downtown parcels, beyond the political consideration.

Clark said from what he understood of the situation, the only difference between this proposal and the 3-Site Plan is that it includes more sites. [The 3-Site Plan was a DDA effort in 2005 to develop city surface parking lots, including lots at First & William, First & Washington and the Kline’s Lot on the east side of Ashley Street, between William and Liberty. The concept underpinning the 3-Site Plan was that parking could be decoupled from development – build a parking structure at First & William and free up the other two sites for development without the constraint of building on-site parking. The 3-Site Plan was opposed by advocates for a greenway, and ultimately never received a vote by the city council.]

Smith said it is the DDA’s job to communicate the fact that none of this is happening in a vacuum and that whatever they undertake, they can’t ignore what is outside the rectangle. Clark wondered if he’d get his hand slapped if he began discussing in committee the forces that were operating outside the rectangle.

Hieftje assured him that he would not get his hand slapped for suggesting opportunities outside the box. He described the narrowing and prioritization of focus as the product of a legislative compromise. Clark quipped that he didn’t feel like he was doing anything if he didn’t get his hand slapped. Keith Orr noted that he felt like that the rectangle was the area that the DDA was focusing on anyway. Splitt said he appreciated the narrower focus.

Comm/Comm: DTE to Build New Substation

Paul Ganz, a DTE regional manager for an area that includes Ann Arbor, along with Michael Witkowski, a DTE engineer, presented the electric utility’s plans to invest $10 million in building a new substation in Ann Arbor, to meet increased demand for electricity. It will serve parts of downtown Ann Arbor. [Ganz last appeared before the DDA board on Sept. 1, 2010 to present them each with a commemorative cross-sectional slice of an old electrical cable that had been replaced as part of the construction of the new underground parking garage.]

Ganz described how a new substation needs to meet three criteria: (1) it must be in the center of the load; (2) land must be available; and (3) the land must be acquirable at a market price. He said that DTE had been working on it behind the scenes for a few years, and was now ready to roll out the plan.

Witkowski told the board that the area of focus for the new substation would be the Ann Arbor service center located at Huron River and Broadway. Currently, he said, the downtown Ann Arbor area is served by three substations – Argo, Burton and Hoover. He noted that the University of Michigan was always growing and that new projects like Zaragon Place II and 601 S. Forest meant that demand for electricity continued to grow.

Witkowski listed out a number of new projects that have been built or are expected to be built that would add around 20 MVA (megavolt amperes) of new load. The existing three substations have 4.8 kV circuits and are typically limited to 4 MVA of load. Other substations outside the central area, Wikkowski said, have 13.2 kV circuits, which can handle around 9 MVA of load. The idea is to add another 13.2 kV substation – the Buckler substation, which will be located at the Ann Arbor service center just north of the Huron River, and south of Canal Street, near the Broadway bridge.

DTE began internal planning in 2008, plans to break ground in the fall of 2011, and hopes to have the new substation up and energized by the spring of 2013. It will come before the Ann Arbor city planning commission sometime in May 2011. In 2013, he said, 601 S. Forest will come online, and DTE wants to be ready for that. The new substation will give DTE more flexibility, he said, and will allow the jumping of circuits during outages, so that coverage can continue to be provided.

In response to a question from Sandi Smith, Witkowski explained that a developer may have to share part of the cost of upgrades of electrical service. But Zaragon II, for example, did not result in a payment by the developer. The project was just under the amount of additional load that would have required a developer share.

Comm/Comm: Underground Parking Garage Construction Update

John Splitt reported on the recent incidents at the construction site of the underground parking site on South Fifth Avenue. [One was a breach in the earth retention system and the other was a sinkhole on the opposite side of the site. See Chronicle coverage: Column:Library Lot from Bottom to Top]. Splitt said that the construction management company, The Christman Company, had taken action and determined that there was no immediate danger, and the site is structurally sound.

Splitt said that the designer of the earth retention system, Soil and Materials Engineers Inc., and the installer of the system, Hardman Construction, had both inspected the structure. The safety fence surrounding the site has been moved back an extra 10 feet, Splitt reported, to give an additional measure of safety for pedestrians. Ground-penetrating radar had been used to determine if any other sinkholes exist.

The Christman Company will be using swing stages – similar to what window washers use – to allow SME Inc. to get up close and visually inspect each structural column. The investigation will continue at least another week, Splitt said. When the investigation is complete, Christman will allow its workers back in the main hole – meanwhile, work has been continuing on the east dog-leg.

Comm/Comm: Commuter Challenge

Director of the getDowntown program, Nancy Shore, addressed the board to alert them to this year’s commuter challenge, which takes place every May – it’s a way to encourage employees of downtown businesses to think about how they get to work.

She gave the board several reasons why she thinks the commuter challenge is important: (1) location – downtown is an important part of Ann Arbor; (2) jobs – the jobs of the future will be held by people who want to work in a downtown area where they can use public transportation to get to their work; (3) money – over 100 prizes are donated by downtown employers, plus gas prices are high now; (4) fun – there are a lot of different events associated with the challenge.

Comm/Comm: Liberty Square

Reporting out from the Downtown Citizens Advisory Council, Ray Detter said that every residential unit of Courthouse Square, located at Huron and Fourth, had now been inspected and that there were some signs of improvement in the performance of the management company.

Comm/Comm: Field Guide Downtown

As part of his Downtown Citizens Advisory Council report, Ray Detter said that a committee had been established to update the printed booklet “The Handbook: A Field Guide to Living in Downtown Ann Arbor.” He said that seven years ago the DDA had paid for the production of the booklets, but this time around, they would not be asking the DDA for any money. The updated version will become a part of the DDA’s website.

Present: Gary Boren, Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Keith Orr, Joan Lowenstein (by speaker phone), John Mouat.

Absent: Leah Gunn, Russ Collins

Next board meeting: Noon on Wednesday, May 4, 2011 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date] It’s anticipated that the board meeting will be rescheduled for a different day the same week.