The Chronicle has not yet reviewed the memo, which deals with private-use tests as applied to the Library Lane underground parking structure. The private-use limitations stem from the fact that the structure was financed with Build America Bonds. For additional background, see: “Column: Rocking Back on the Library Lot.”

The Library Lane parking deck is highlighted in yellow. The name “Library Lane” is based only on the proximity of the structure to the downtown location of the Ann Arbor District Library. The library does not own the structure or the mid-block cut-through. (Base image from Washtenaw County and City of Ann Arbor GIS services.)

The council’s meeting actually featured three items related to the future of the Library Lane deck surface: (1) a resolution reserving part of the surface for a publicly owned urban park; (2) a resolution that moved toward hiring a brokerage service for selling development rights to the surface; and (3) a resolution that waived attorney-client privilege on a memo from the city’s outside bond counsel.

On the third item, the council voted to approve the waiver of an attorney-client privileged memo on the use of Build America Bonds that financed the parking deck.

The council vote on the urban park resolution was ultimately 7-3 with mayor John Hieftje, Christopher Taylor (Ward 3) and Margie Teall (Ward 4) dissenting. Sally Petersen (Ward 2) was absent. That came after a significant amendment to the resolution that gave flexibility to the square footage to be reserved instead of fixing it at 12,000 square feet. The key resolved clause, as adopted by the council, read:

Resolved, That City Council approve the reservation of the site for an urban public park of between approximately 6,500 and 12,000 square feet on the surface of the Library Lane Structure bounded by the Fifth Avenue sidewalk on the west, the Library Lane Street curb to the south, the western entry to the central elevator to the east, with the northern boundary to be determined at a future date;

The council’s vote came after public commentary from several speakers in support of the resolution. In addition, Ann Arbor District Library director Josie Parker was asked to the podium to comment and she read aloud a resolution that the library board had passed earlier that evening, opposing the council’s resolution.

A report on council deliberations, which lasted over 2.5 hours, is included in The Chronicle’s live updates from city hall during the March 17 meeting.

The resolution on reserving a portion of the surface of the Library Lane parking structure for a publicly-owned urban park had been postponed from the council’s March 3, 2014 meeting.

Library Lane park proposal as presented to the city’s park advisory commission on Feb. 25.

The proposal had been presented to the city’s park advisory commission, the week before the March 3 council meeting. For a detailed report of the PAC meeting of Feb. 25, 2014, see Chronicle coverage: “Concerns Voiced over Urban Park Proposal.”

One of the central points of friction over how to proceed is the question of who will own the area on which the publicly accessible space – a park or plaza – is placed.

The original resolution contemplated a publicly-owned facility that is designated as a park in the city’s park planning documents. That would have made it subject to a charter requirement on its sale – which would require a public referendum. The resolution as amended did not include that stipulation in its “resolved” clauses.

Councilmembers who are open to the possibility that the publicly accessible facility could be privately owned are concerned about the cost of maintenance of a publicly-owned facility. The city’s costs for maintaining Liberty Plaza – an urban park located northeast of the proposed Library Lane public park – are about $13,000 a year. That doesn’t include the amount that First Martin Corp. expends for trash removal and other upkeep of Liberty Plaza. [urban park cost estimates]

Revisions to the resolution were undertaken between the council’s March 3 and March 17 meetings. The version considered on March 17 indicated that the area designated as a park would be 12,000 square feet, compared to 10,000 square feet in the original resolution. That square footage reflects the actual dimensions of the proposed boundaries, according to a staff memo. That square footage was then revised at the meeting to “between approximately 6,500 and 12,000 square feet.” The revised resolution also eliminated an October 2014 deadline for making design recommendations to the council, and deleted any reference to PAC. [.pdf of revised resolution considered March 17 council meeting]

An additional point of friction involves how much of the site would be left for development if the northwest corner of the site were devoted to a public plaza/park. Related to that issue is whether the existing northern border of the site – which currently features the sides and backs of buildings – can adequately support a public plaza/park. The fact that the site does not currently enjoy other surrounding buildings that turn toward it is part of the reason advocates for a park are now asking that the Ann Arbor District Library, located to the south of the site, relocate its entrance from Fifth Avenue to the north side of its building. However, at the library board’s March 17 meeting, trustees on the board’s facilities committee reiterated reasons why they were not recommending to relocate the entrance.

In terms of the color-shaded map produced by city staff, the focus of controversy is the light orange area, which was designed to support “medium density building.” Based on staff responses to councilmember questions, the density imagined for that orange rectangle could be transferred to the planned high-density (red) portion of the site. The maximum height in the D1 zoning area is 180 feet, and the parking structure was designed to accommodate the structural load of an 18-story building.

City staff diagram illustrating the building possibilities for the top of the underground Library Lane parking structure.

Related to the urban park item was a  resolution also approved at the March 17 meeting – to obtain brokerage services and to list the surface of the Library Lane deck for sale. It was brought forward by Stephen Kunselman (Ward 3).

The approach being taken would be similar to the path that the city council took to sell the former Y lot. For that parcel, the council directed the city administrator to move toward hiring a real estate broker to test the market for development rights. The council took the initial step with that property, located on William between Fourth and Fifth avenues in downtown Ann Arbor, close to a year ago at its March 4, 2013 meeting.

A rider agreement – to ensure against non-development and to sketch out the amount of open space and density – was part of the approach the city took to the former Y lot deal with hotelier Dennis Dahlmann.

The issue of open space figures prominently in Kunselman’s resolution. At the March 17 meeting, the council amended out the phrase “highest and best use” from the resolution. A key “whereas” clause and two of the “resolved” clauses read as follows:

Whereas, Developing the public space at the same time the site is developed will provide for increased activity, safety, and security; limit nuisance behavior at this public space; provide potential funding for public space features and programming; and have a responsible private entity for ongoing maintenance and
…
Resolved, That the City will seek, as conditions for development rights at a minimum, public open space, private maintenance of the public space, and pedestrian access to the public space as features of any private development;

Resolved, That implementation of the conditions for development rights will be determined by City Council through selection of the purchase offer that best responds to mixed-use, density, integration with surrounding uses, and public space and through the City’s established site plan procedures and policies;

The phrase “public space” sometimes is meant to include publicly-accessible, but privately-owned space. Kunselman responded to an emailed query about his intended interpretation of “public space” by writing: “It’s meant to give the broadest interpretation so as to solicit the widest range of interest by prospective purchasers.”

Also related to the council’s brokerage service resolution, the Ann Arbor planning commission agenda for March 18, 2014 includes a resolution giving advice to the council about how to handle the sale the parking deck surface. The two resolved clauses are:

Resolved, that the City Planning Commission recommends to City Council that if the development rights over the “Library Lot” underground parking structure are sold, an RFQ/RFP process be utilized that conditions the sale of the property in order to obtain a long-term, ongoing and growing economic benefit for the residents of the city;

Resolved, that the City Planning Commission recommends to City Council that if the development rights over the “Library Lot” underground parking structure are sold, an RFP contain some or all of the following conditions:

• A building that generates foot traffic, provides a human scale at the ground floor and creates visual appeal and contains active uses on all first floor street frontage and open space;
• A requirement for an entry plaza or open space appropriately scaled and located to be properly activated by adjacent building uses and to be maintained by the developer;
• A “mixed use” development with a density at around 700% FAR that takes advantage of the investment in footings and the mid-block location with active uses that have a high level of transparency fronting the plaza and at least 60% of Fifth Avenue and Library Lane frontages, while encouraging large floor plate office or lodging as a primary use, residential as a secondary use, and incorporating a cultural venue.
• A requirement for the entry plaza or open space to incorporate generous landscaping;
• A requirement that discourages surface parking, limits vehicular access for service areas to be located in alleys where available and prohibits service areas from being located on Fifth Avenue
• To seek an iconic design for this site that is visible on all four sides and that creates an iconic addition to the skyline;
• A requirement for high quality construction; and
• A request for a third party environmental certification (e.g., LEED Gold or Platinum)

The planning commission resolution is being brought forward by commissioners Diane Giannola and Bonnie Bona. It’s similar in intent to the recommendation that the commission gave to council regarding the sale of the former Y lot.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

The council voted over dissent from Christopher Taylor (Ward 3) – who is himself an attorney – to waive attorney-client privilege on the document, dated August 9, 2012. The memo apparently provides an analysis of the implications for use of the Library Lane parking structure, based on the Build America Bonds used to finance its construction. Facilities financed by such bonds carry with them private-use limitations.

The Chronicle has not yet been provided with a copy of the memo.

Taylor made a bid to amend the resolution so that it directed the city attorney to write a memo that included the information in the bond counsel’s memo. That was subsequently modified to direct the bond counsel to rewrite the memo for public consumption. But the amendment failed. It got support only from Taylor, mayor John Hieftje, Sabra Briere (Ward 1) and Margie Teall (Ward 4).

The idea of giving direction to rewrite an existing memo had proven to be a successful strategy on a resolution passed earlier in the March 17 meeting. That original resolution would have waived privilege on a Feb. 25, 2014 city attorney memo that described how property assessment appeals work. Instead, the council amended that resolution to direct the city attorney to prepare a new memo for public consumption.

In broad strokes, the American Recovery and Reinvestment Act (ARRA) of 2009 – also known as the stimulus act – created the Build America Bonds program. BAB authorized state and local governments to issue taxable bonds to finance any capital expenditures for which they otherwise could issue tax-exempt governmental bonds. The bonds have a limitation related to how the facilities financed through such bonds can be used. Glossing over details, only up to 10% of a facility financed through BAB can be dedicated to private use.

Related to the private use question are monthly parking permits. All other things being equal, the Ann Arbor Downtown Development Authority – which manages Ann Arbor’s public parking system under an arrangement with the city – does not contract with businesses for monthly parking permits in public parking structures. Instead, the DDA contracts with individuals on a first-come-first-serve basis.

For the Library Lane structure, the DDA offered introductory pricing of its monthly permits to encourage the structure’s initial use. Construction was completed in the summer of 2012.

The nature of that introductory pricing scheme could prompt questions about whether some of those permits might properly count as “private use” of the structure. A $95 introductory rate (which reflects a $50 savings over most other structures) was offered to employees of “new to downtown businesses” and to permit holders in the Maynard or Liberty Square parking structures who were willing to transfer their permit to Library Lane. The pricing is good through August 2014.

Two years ago, Barracuda Networks was moving to downtown Ann Arbor, and therefore qualified as a “new to downtown” business. So its employees thus qualified for the discounted monthly parking permits.

In a July 13, 2012 email to Ward 2 councilmember Jane Lumm, DDA executive director Susan Pollay wrote in part:

I met with the two key individuals directing the Ann Arbor Barracuda office and told them point blank, that that there will be parking for Barracuda employees now when they move to downtown, and as they grow their employee ranks over the next few years.

To the extent that Barracuda employees (or employees of other downtown businesses) have privileged access or enjoy an economic advantage (like reduced rates), then it’s possible the private use test could be met for those spaces.

Four years ago, Wayne State University professor of law Noah Hall, writing on behalf of the Great Lakes Environmental Law Center (GLELC), sent the city of Ann Arbor a letter on the BAB private-use issue. [For more detail, see his letter: April 14, 2010 letter from Noah Hall] GLELC was a party to a lawsuit filed over the Library Lane parking structure, which eventually was settled.

The document for which the council voted to waive attorney-client privilege on March 17 appears to be one of the items denied in a response to a request made by The Chronicle under Michigan’s Freedom of Information Act. The item not provided to The Chronicle was a file attached to an email sent by CFO Tom Crawford on August 13, 2012 to councilmembers – named “BHO 1-# 1607254-v8-Ann_Arbor _ -_Memo_re_Permitted_Parking_Arrangements.docx” The request for that document was denied based on the statutory exemption allowed for items protected under attorney-client privilege.

The resolution waiving attorney-client privilege on the Dykema memo was put forward by the city council’s audit committee. Members of that committee are Sumi Kailasapathy (Ward 1), Jane Lumm (Ward 2), Sally Petersen (Ward 2), Stephen Kunselman (Ward 3), and Jack Eaton (Ward 4). [For additional background, see: "Column: Rocking Back on the Library Lot."]

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

This illustration is a mashup of a photo taken on July 12, 2012, the day of the grand opening of the Library Lane parking structure, and a photograph from the author’s family archives on which an original lyric is based: “I’m an old man, and I don’t care, I’m sitting here in my rockin’ chair, watching the mean old world go by …”

And so it is that we’ll talk about the nuisance of the deer herd in 2008 … and again in 2014. We’ll talk about slush puddles in the downtown in 2009 … and again in 2014.

We talk about those things not because we suffer from community-wide senility, but rather because they are issues that remain in some way unresolved.

And that is why we are again talking about the top of the Library Lane underground parking structure in downtown Ann Arbor. The project included not just the parking deck itself, but also streetscape improvements to Fifth and Division, other pedestrian improvements, and investments in foundations and other work to support future development – a total of about $59 million worth of stuff.

The bulk of that cost was financed through Build America Bonds. What are the implications of the BAB financing for the future use of the parking structure’s spaces? That’s the question prompting me to write this column. I’d like to orient the public to the city’s analysis of how those spaces can be allocated to private uses.

Related to that, a resolution to be placed on the city council’s March 17 meeting agenda by the council audit committee is good news. The resolution would waive attorney-client privilege on a document that I think will help clarify questions associated with those bonds.

But I want to fill in some background first. Stop me if you’ve heard this before.

Library Lane: Background

The Library Lane project finished construction in the summer of 2012. At that time no specific plan was in place to take advantage of the fact that more than 700 parking spaces had been constructed underground. The spaces were consciously and deliberately constructed underground so that the area above those 700 parking spaces could be put to a greater and better use than simply parking cars. Yet that is how we’re now using the surface of the Library Lane parking structure – to park cars.

So what will go on top?

Of course, we’ve talked about this before. The conversation is documented in The Chronicle’s archives at least a half decade ago, and I’m sure the conversation stretches back years before that. At the March 4, 2009 meeting of the Ann Arbor Downtown Development Authority board, Sandi Smith introduced a resolution of support for a community-wide process to decide what the future of the top of the structure should be: “[Smith] said that [the resolution] was prompted by the dialogue about the underground parking garage, which had prompted the frequent question from residents: What goes on top?”

That DDA board resolution came just a couple of weeks after the city council voted at its Feb. 19, 2009 meeting to approve the site plan for the parking structure and the notification of intent to issue bonds to pay for it.

Fast forward through an RFP process that ended in a rejected conference center proposal, a planning effort called Connecting William Street that never was incorporated into the city’s master plan, and finally a set of recommendations from the city’s park advisory commission (PAC). The PAC report was made last year on Oct. 15, 2013, and forwarded to the city council. Three weeks later, the council formally accepted the report from PAC on Nov. 7, 2013.

Between November 2013 and February 2014, the only somewhat visible effort on the council to move the what’s-on-top issue forward was by Ward 4 councilmember Jack Eaton, who worked with the Library Green Conservancy to craft a resolution that appeared on the council’s March 3, 2013 agenda. Eaton’s resolution – his first to be put forward since his election to the council in November 2013 – incorporated elements of PAC’s recommendations.

But the fact that Eaton’s resolution was not necessarily consistent with all aspects of PAC’s recommendations was reflected in the sentiments of PAC’s current and immediately previous chair, Ingrid Ault and Julie Grand – who both addressed the council on March 3 expressing their concerns about the resolution.

Eaton’s resolution spurred mayor John Hieftje to counter at the March 3 meeting with a slide presentation sketching out a connected walk from Liberty Plaza to the planned Allen Creek greenway, linking up public open spaces at Library Lane, the corner of Fifth and William, William and Main, and First and William.

Eaton’s resolution was postponed, and will appear on the council’s March 17 agenda.

Implications of a Companion Resolution

Meanwhile, Ward 3 councilmember Stephen Kunselman will be putting forward a companion resolution on March 17 directing the city administrator to hire a real estate broker to handle the sale of the rights to build something on top of the Library Lane parking structure. That approach would be similar to the path the city council took to sell the old Y lot. That sale is now set to close on April 2 – according to city administrator Steve Powers, who responded on March 12 to an emailed query from The Chronicle.

I think Kunselman’s move has some implications for Eaton’s resolution, because part of the immediate audience for that resolution will be developers who are interested in making an offer. So one potential function of Eaton’s resolution – which it does not currently serve in an explicit way – is to lay out the universe of possibilities for elements that a rider agreement to a sales contract might include. A rider agreement – to ensure against non-development and to sketch out the amount of open space and density – was the approach the city took to the old Y lot deal with hotelier Dennis Dahlmann.

Responding on March 11 to an emailed query from The Chronicle, Eaton indicated that he was working on some modifications to the resolution for March 3 March 17, but didn’t say what the nature of those modifications would be.

Build America Bonds: Clarity on the Issue

Kunselman’s effort to move the building rights into the real estate marketplace will, I think, have a positive impact on the clarity of the information that the city will need to provide – about an issue related to the use of Build America Bonds to finance the Library Lane project.

In broad strokes, the American Recovery and Reinvestment Act (ARRA) of 2009 – also known as the stimulus act – created the Build America Bond program. BAB authorized state and local governments to issue taxable bonds to finance any capital expenditures for which they otherwise could issue tax-exempt governmental bonds. The bonds have a limitation related to how the facilities financed through such bonds can be used. Glossing over details, only up to 10% of a facility financed through BAB can be dedicated to private use.

A clear example of a private use of the Library Lane parking facility, I think, would be a hypothetical contract between the Ann Arbor Downtown Development Authority (which manages the city of Ann Arbor’s parking system) and a downtown business – to purchase monthly parking permits in the Library Lane structure. The 48 monthly parking permits that the 624 Church Street residential project was allowed to purchase through the city’s contribution-in-lieu (CIL) program would seem to fit the criteria of “private use” of a facility. But those permits were awarded in the Forest Street structure, not Library Lane.

All other things being equal, the Ann Arbor DDA does not contract with businesses for monthly permits. Instead, the DDA contracts with individuals on a first-come-first-serve basis.

Still, for the Library Lane structure, the DDA offered introductory pricing of its monthly permits to encourage the structure’s initial use. And the nature of that introductory pricing scheme could prompt questions about whether some of those permits might properly count as “private use” of the structure. A $95 introductory rate (which reflects a $50 savings over most other structures) was offered to employees of “new to downtown businesses” and to permit holders in the Maynard or Liberty Square parking structures who were willing to transfer their permit to Library Lane. The pricing is good through August 2014.

Two years ago, Barracuda Networks was moving to downtown Ann Arbor, and therefore qualified as a “new to downtown” business. So its employees thus qualified for the discounted monthly parking permits.

In a July 13, 2012 email to Ward 2 councilmember Jane Lumm, DDA executive director Susan Pollay wrote in part:

I met with the two key individuals directing the Ann Arbor Barracuda office and told them point blank, that that there will be parking for Barracuda employees now when they move to downtown, and as they grow their employee ranks over the next few years.

To the extent that Barracuda employees (or employees of other downtown businesses) have privileged access or enjoy an economic advantage (like reduced rates), then I think it’s conceivable that the private use test could be met for those spaces. But short of a legal opinion provided by an expert in the field of private/public use issues, it’s hard to say for sure.

Four years ago, Wayne State University professor of law Noah Hall, writing on behalf of the Great Lakes Environmental Law Center (GLELC), sent the city of Ann Arbor a letter on the BAB private use issue. [For more detail, see his letter: April 14, 2010 letter from Noah Hall] GLELC was a party to a lawsuit filed over the Library Lane parking structure, which eventually was settled.

The need to provide absolute clarity on this issue to any potential purchaser of building rights on top of the Library Lane structure will, I think, work to the benefit of us all. That’s because I think that same kind of information will also be provided to the public.

In the meantime, The Chronicle has appealed a partial denial of a request made under Michigan’s Freedom of Information Act to the Ann Arbor city council. One of the items denied in response to the request was a memo with the file name: “BHO 1-# 1607254-v8-Ann_Arbor _ -_Memo_re_Permitted_Parking_Arrangements.docx” The request for that document was denied based on the statutory exemption allowed for items protected under attorney-client privilege. But it sure sounds like it could provide some clarity on the question of whether certain monthly parking arrangements are public or private uses.

We made the original request under the FOIA of the council as a public body, not the city of Ann Arbor as a municipality – so that our appeal would be properly made of the council itself as the head of the public body. The city attorney’s office does not appear to be persuaded by our legal theory of the proper venue of appeal – because the response to our appeal came from city administrator Steve Powers. The letter from Powers upheld the denial.

However, the members of the city council’s audit committee have placed a resolution on the council’s March 17 agenda to waive attorney-client privilege on the document in question. That’s a good thing. It will be even better if it gets the six votes it needs for approval.

The City’s Analysis: 28.69%

It’s not like the city of Ann Arbor has refused to provide any information at all about its analysis of the Build America Bond 10% limitation on private use. In fact, at the council’s audit committee meeting on March 10, CFO Tom Crawford circulated a box diagram laying out how the city arrived at the conclusion that 28.69% of the parking spaces in Library Lane could be dedicated to private use.

Image links to .pdf file.

I have a bias against boxes and arrows, so I took the same information in that chart and recast it as a series of three bar charts. Shades of red represent funding that must go into public use parts of the facilities. Shades of green represent funding that can go into private use parts of the facilities: the DDA’s cash contribution (from parking system revenue and tax increment finance revenue) plus 10% of the bond proceeds.

Key is that the DDA’s initial cash down payment can, according to the city’s analysis, be used to finance a portion of the facility that is not subject to any use conditions (i.e., can be dedicated to private use). All the sources of funds for the nearly $60 million project are laid out in Chart 1:

Chart 1: Sources of funds for Library Lane, Fifth and Division project.

Sticking with the idea that red shades correspond to funding associated with a public use requirement, while green shades correspond to funding that allows private use, the money spent on project elements are presented in Chart 2. Important here is recognizing that the project scope included far more than just a parking deck.

Chart 2: Cost of project elements for Library Lane Fifth and Division Project.

Chart 3 is just a re-presentation of Chart 2, but highlights the two parking deck portions of the project in black and gray:

Chart 3: Cost of project elements for Library Lane Fifth and Division Project. Focus on parking deck.

The pie chart was constructed using just the two parking deck portions from Chart 3:

Chart 4: Parking deck spaces by eligibility for private/public use.

The animation below just cycles through the bar charts, in case you find that easier to line things up visually. Here’s a larger version of the animation: [large animated bar charts]

Charts 1-4: Animation

Coda

Ann Arbor residents won’t hesitate to tell you what they think ought to go on top of Library Lane. I am no different. I have this idea that a grand teeter totter could be constructed on that spot. But I will stop now, because you might have heard this before.

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of public bodies like the Ann Arbor city council. We sit on the hard bench so that you don’t have to. Click this link for details: Subscribe to The Chronicle. And if you’re already supporting us, please encourage your friends, neighbors and colleagues to help support The Chronicle, too!