On Dec. 4, 2013, city administrator Steve Powers attended his first DDA board meeting as a member. (Photos by the writer.)

The board also considered a resolution added to the agenda on the day of the meeting, related to the contribution-in-lieu (CIL) parking agreement for the 624 Church St. project – but ultimately decided to table that resolution pending further review at the committee level.

The DDA’s Dec. 4 resolution allocating $280,000 for the Main Street light pole replacement ended the political wrangling over who should pay for those downtown Ann Arbor light poles. Replacement of the deteriorating poles was identified by the city as a need in the first half of 2012. The source of an estimated $600,000 required for the project was specified in the city’s CIP (capital improvements plan) that year as coming from the DDA – though the funds were at that time not authorized by the board.

In the spring of 2013, the city council weighed how it might clarify the city’s ordinance that restricts the DDA TIF (tax increment finance) capture. In that context, DDA executive director Susan Pollay told the council that the DDA might not be able to afford to pay for the Main Street light pole project – if the council changed the ordinance language to clarify the calculations in a way that did not favor the DDA. The question of the DDA’s TIF capture was not ultimately settled until the council’s Nov. 18, 2013 meeting.

In the interim, the city council voted at its May 20, 2013 meeting to request that the DDA allocate at least $300,000 for the $580,000 light pole project. After the council then declined at its Oct. 21, 2013 meeting to approve a budget allocation for the remaining $280,000 that was needed for the project, the DDA board passed its Dec. 4 resolution, citing the urgency of replacing at least 36 of the poles as the reason for its decision.

According to the DDA’s resolution, staff will use the DDA funding to begin now with replacement of those poles most in need of being removed, with the remainder replaced in the summer of 2014.

Also at its Dec. 4 meeting – in connection with the city’s pending sale to Dennis Dahlmann of the former Y lot, at William Street and Fifth Avenue – the DDA board passed a resolution that waived claim to $1,439,959 in reimbursements from the sale that the DDA has calculated it might be owed. The city council adopted a policy on Oct. 15, 2012 that included depositing net proceeds (after reimbursements) from the former Y lot sale into the city’s affordable housing trust fund.

So the DDA board’s action is an attempt to increase the amount that will be deposited into the affordable housing trust fund. The resolution passed by the DDA board also calls on the city council to waive the city’s claim to reimbursements. The city purchased the property in 2003 for $3.5 million and has made interest-only payments for the last 10 years on a loan for that amount. The agreed-upon sale price to Dahlmann is $5.25 million.

In another formal action taken on Dec. 4, the DDA board accepted the audit report from the most recently concluded fiscal year – FY 2013, which ended June 30, 2013. The auditor issued an “unmodified” or clean opinion.

The board also considered a request, which was ultimately tabled, from the developer of the 624 Church St. project. The developer is asking for an extension of the contractual agreement under which parking permits could be purchased using the city’s contribution-in-lieu (CIL) program. The program allows a developer to satisfy certain zoning requirements that parking spaces be provided for a project – by purchasing monthly permits in the public parking system at a premium rate, instead of building the spaces on site. The developer of the 624 Church St. project wants the ability to extend the 15-year minimum to cover a 30-year financing period – based on feedback from firms that would be providing the financing. The DDA board ultimately voted to table the question pending further review by the board’s operations committee.

The board’s newest members introduced themselves at the meeting: city administrator Steve Powers and Main Street retailer Cyndi Clark.

Also at its Dec. 4 meeting, the board heard a range of updates on various projects and public commentary. Highlights included a report from the Main Street BIZ (business improvement zone), which has enough money in its fund balance to handle sidewalk snow removal for the coming winter, without collecting the winter tax assessment to which it is entitled. In a separate update, there’s a possibility that downtown ambassadors could be hired by the DDA as soon as the summer of 2014.

Other topics covered in updates included the effort to save the State Theater, the NHL’s Winter Classic on New Year’s Day, and The Puck Drops Here festivities on New Year’s Eve.

Main Street Light Poles

The need to replacement the Main Street light poles due to rusting bases has been known since last year – in early to mid-2012.

Downtown Ann Arbor Main Street light pole on northeast corner of Main & William. Photograph is from the city of Ann Arbor, taken in April 2012.

This spring, at city council meetings, replacement was characterized as an urgent public safety issue, because the bases of some of the poles are rusting. Various statements were made about the number of light poles that had failed, but responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced.

The poles were part of the city’s CIP last year with the source of the funds identified in the CIP that year as the DDA’s TIF (tax increment finance) fund. The status of the funding – estimated at that time to be $600,000 – was identified as not yet authorized.

Over the course of the year, the replacement of the light poles became part of the fractious politics between the city council and the DDA.

In timeline overview form:

• April 1, 2013: Initial approval of DDA TIF capture ordinance revision (Chapter 7). Main Street light poles were cited as a project the DDA might not be able to pay for if the Chapter 7 revisions were approved.
• April 15, 2013: City council approves an amendment put forward by Sally Petersen (Ward 2) to the Chapter 7 revision, which delayed applying the revised language until FY 2015.
• May 20, 2013: City council approves FY 2014 budget amendment that affects DDA budget.
  

  Whereas, The DDA is forecasted to receive $568,343 more in TIF revenues than anticipated in the proposed FY14 budget;
  Whereas, Council desires to support the public housing program in the DDA area;
  RESOLVED, The DDA TIF fund revenue and expenditure budgets be increased by $568,343 for the purposes of creating a one-time transfer;
  RESOLVED, The DDA Housing fund revenue and expenditure budgets be increased by $300,000 to reflect Council’s desire for the DDA to support affordable housing in the DDA area; and
  RESOLVED, Ann Arbor City Council requests that the DDA allocate at least $300,000 for the replacement of the light poles on Main Street.

• June 5, 2013: DDA board meets and executive director Susan Pollay reports the council’s action. She tells the board that she’s meeting with city staff to figure out how the light poles will be paid for.
• July 3, 2013: DDA board allocates $300,000 for the light pole replacement project at the same meeting it allocates $250,000 for other capital projects, and $59,200 to support the creation of a business improvement zone in the South University area. One “whereas” clause characterized the council’s action in a way that is not based on the wording of the city council’s May 20 budget amendment.
  

  Whereas, Through the 2013/14 budget approval process it was determined that the City would undertake this street light replacement in calendar year 2013, with the DDA allocating $300,000 toward the cost of the project, and the City allocating $216,000; [.pdf of complete DDA light pole resolution]

• Oct. 21, 2013: City council resolution allocating $280,000 toward the project fails on a 7-4 vote. It needed eight votes for approval.
• Oct. 31–Nov. 1, 2013: City staff inspect the 81 light poles, determining that 36 need to be replaced within 6 months and the remaining 45 within 1-2 years.

Until the Oct. 21 council resolution failed, according to city of Ann Arbor public services area administrator Craig Hupy and DDA executive director Susan Pollay, their intent was that a cost-sharing arrangement between the city and the DDA would allow for the DDA to purchase the fixtures for all the poles, with the city paying for the poles. The DDA proceeded with the purchase of the fixtures. That left insufficient funds to deal with the 36 Main Street light poles most in need of replacement. The initially planned splitting of the costs, which did not come to fruition, appears to have contributed to the timing of the DDA’s resolution to allocate the additional $280,000 on Dec. 4.

Main Street Light Poles: Board Deliberations

Roger Hewitt began deliberations on Dec. 4 by indicating he believed it was back in May when it was determined that the light poles on Main Street were rusting out at the bases, and that they all needed to be replaced. [The need to replace the poles was identified a year earlier in 2012, with the source of the funds identified in the city's CIP that year as the DDA's TIF fund. The status of the funding – estimated at that time to be $600,000 – was identified as not yet authorized in the CIP.]

Hewitt indicated that in May, the DDA passed a resolution that it would allocate $300,000 of the $580,000 for the total cost of the project – which would be carried out by the city, he said. [The DDA's resolution was actually passed on July 3, 2013. What was passed in May – on May 20, 2013 – was a city council budget amendment that included a request for the DDA to allocate at least $300,000 toward the light pole project.]

Hewitt continued by saying that the city’s portion was going to be $280,000, but when asked to approve the additional funds, that resolution “was not successful at the city council.” There was therefore a shortage of $280,000, Hewitt said. An examination had been done, and many of the light poles are a safety hazard, he said. So the DDA was recommending that $120,524 be allocated in this fiscal year. That’s the amount remaining in a bond fund for State Street improvements that were done back in 2000 or so, Hewitt said. It’s money that had been sitting in a fund that had been unspent for about 10 years. This would require changing the budget, he said. And then in the next fiscal year [FY 2015], Hewitt continued, the remaining money would be allocated. Hewitt alluded to the fact that the FY 2015 budget has not yet been adopted by the DDA board.

DDA board chair Sandi Smith.

DDA board chair Sandi Smith offered what she described as a “super friendly amendment” to change the description of the fiscal years to match the city of Ann Arbor’s labels. [The current fiscal year, which started July 1, 2013 is FY 2014 under the city's labeling scheme. The DDA has historically named the calendar years spanned by the fiscal year – e.g., calling this year FY 2013-14.]

John Mouat asked if there was conversation about the State Street improvement project. He wanted to know what the status of the project was. Hewitt told Mouat that the project was completed over 10 years ago. Hewitt said that in the upcoming fiscal year, the DDA should take a look at improvements in that area. Some of the improvements made back then had taken a beating, Hewitt said, so he felt it would be appropriate to spend some money in the State Street area to do repairs in the existing streetscape.

Mouat wondered whether some aspects of the State Street project had not been completed in the context of the moratorium on new streetlights.

By way of background, the “moratorium” on additional streetlights has its origins in a budget amendment approved by the city council in 2006. The history and current policy (which includes the moratorium) was reviewed in a message to councilmembers from city administrator Steve Powers this past summer. [.pdf of July 9, 2013 email]

At the Dec. 4 meeting, Hewitt said he didn’t think there were any streetlights that were a part of the State Street project plan that were not completed. DDA executive director Susan Pollay explained that as the lights were installed, the DDA discovered that the streetlights that had been selected didn’t cast as much light as they’d hoped. There were some very tall lights that fit that description, she said – at that time, light pollution was a very big concern, she added. The light levels were low, she said. Some light was supposed to be provided by store windows.

Pollay described how “dollars were held back” so that additional light could be added to the area. Ultimately the design, which looked good on paper, was not successful in achieving the desired light levels, she said. There’s an unofficial understanding that the city’s electric bills are not supposed to be increased by adding more lights. As the DDA waits to understand what the city policy on replacing streetlights might be, Pollay said it was appropriate to use that money to replace the light poles on Main Street. At some point, the light levels on State Street would be revisited, she said.

Mouat thanked Pollay for that clarification. John Splitt wanted to reaffirm that he hoped something could be done in the coming year in the State Street area – in connection with the lighting, as well as with the planters. Russ Collins offered what he called a “niggling point” about the Washington Street area: The streetlights on Washington Street are off – they’re not functioning on the south side, Collins said.

Outcome: The board voted unanimously to approve the additional $280,000 in funding.

Proceeds of Y Lot Sale

By way of background, at its Nov. 18, 2013 meeting, the Ann Arbor city council approved the sale of city-owned property downtown – a parcel north of William Street between Fourth and Fifth avenues – to Dennis Dahlmann for $5.25 million. The city purchased the property for $3.5 million 10 years ago and has been making interest-only payments on the property for that time. A balloon payment is due at the end of this year. The DDA has been shouldering roughly half of the interest payments on the loan taken out by the city.

The former Y building offered 100 units of single-resident occupancy (SRO) low-income housing. Soon after the city’s purchase, the mechanical systems in the building failed, and all the residents needed to be relocated. The building was subsequently demolished, which the DDA paid for. Equipment was installed so that it could be used as a surface parking lot until its ultimate disposition was determined.

At its Nov. 18 meeting, the council did not delve into the question of how the net proceeds of the pending sale would be defined, but some councilmembers indicated they were pleased that the result would be a deposit into the city’s affordable housing trust fund. A year ago at the council’s Oct. 15, 2012 meeting, councilmembers adopted a resolution that indicated the proceeds of the sale would:

“… first be utilized to repay the various funds that expended resources on the property, including but not limited to due diligence, closing of the site and relocation and support of its previous tenants, after which any remaining proceeds be allocated and distributed to the Affordable Housing Trust Fund …

That council policy was approved after the DDA board passed its own resolution on Sept. 5, 2012, encouraging the city to return to a previous policy that dedicated the net proceeds of sales of all city-owned land (not just the Y lot) to support affordable housing.

On Dec. 4, Keith Orr offered a replacement to the resolution that was included in the board packet. Orr alluded to the fact that he was bringing forward the resolution – because he served in the “Dave DeVarti seat” on the DDA board – even though many people had worked on it.

By way of additional background, during his period of service on the DDA board, DeVarti was a staunch supporter of funding for affordable housing. DeVarti was not reappointed, and in late 2008 Orr was appointed to replace him. After DeVarti left, board members sometimes have quipped that they were “channeling Dave DeVarti” when they spoke in support of affordable housing.

During public commentary at its Nov. 6, 2013 meeting, DeVarti addressed the board on the topic of the former Y lot, suggesting that the DDA purchase the lot outright, so that the need to repay the loan would be removed as the impetus toward selling the lot. That approach would give the city a lot more flexibility, he had argued.

The substitute resolution offered by Orr at the board’s Dec. 4 meeting included a separate “whereas” clause establishing the DDA’s position that affordable housing is in the interest of the downtown. The revision also named specifically the net amount that the DDA believes it has invested in the property: $1,439,599. And finally, the revised resolution separately recommended the city council waive its own reimbursement of its costs in connection with the sale of the former Y lot parcel.

Orr pointed out that the address of the property is 350 S. Fifth. He noted that the city now has a purchase agreement. Orr said that part of the sales agreement is that entities that had investment money in the property would be reimbursed. [Later in the meeting, city administrator Steve Powers, who was attending his first meeting as a DDA board member, corrected Orr's statement, pointing out that this was not part of the sales agreement but rather a city council resolution, passed in 2012.] The largest portion of the DDA’s contribution was paying for the demolition of the former Y building and picking up a portion of the interest payments.

A document provided at the DDA board meeting showed the demolition costs at $1.469 million and interest payments totaling $600,426 since 2004. The net contribution, factoring in the income the DDA received from the surface parking operations it established on the parcel after demolishing the building, was $1,493,959. So the resolution asked the DDA board to waive reimbursement of that amount. [The copy of the resolution distributed to the audience named $1,439,959 as the amount of the DDA board was waiving. That's the amount Orr named in reviewing the resolution. A separate document distributed at the meeting with the actual breakdown of payments and costs showed $1,493,959. The correct math based on those figures is the greater amount: $1,493,959.]

The resolution also asked the city council to waive its claim to reimbursements, which Orr said was around $ 2.7 million. The goal, Orr said, was to ensure that a substantial investment in affordable housing can be made.

Joan Lowenstein followed Orr’s description by saying that the DDA’s goal has been to see that the maximum amount from net proceeds of the sale go into the city’s affordable housing trust fund.

Orr confirmed Lowenstein’s understanding, but added that the resolution reflected everything that the DDA could do to maximize the investment in affordable housing as a result of that property sale. The DDA’s commitment to affordable housing, Orr said, was confined to investments within the district, or within 1/4 mile of the district. The city had more flexibility, Orr said.

Al McWilliams asked about the general motivation to use the proceeds from the Y lot to support affordable housing. Orr said that one reason is historical: The former Y building had included 100 single-resident occupancy units that provided low-income housing.

Orr continued by saying there’s always been this feeling that the proceeds of the sale should help low-income and affordable housing. Orr also pointed out that when board chair Sandi Smith served on the city council, the council was already talking about doing that. “It’s not a particularly new idea,” he concluded.

Bob Guenzel said that in his mind, it was more than a promise that those 100 units would be rebuilt in the downtown area, even if not on the same piece of property. That hasn’t happened for a number of reasons, Guenzel said, but the “substitute” is that the proceeds of the sale would be used for affordable housing. A lot of people remember that community commitment that was made, he concluded.

Russ Collins asked: Does the city have specific plans to build – or cause to be built – affordable housing? Collins wondered if there was any plan to contract with the Delonis Center [a homeless shelter located in Ann Arbor] to operate supportive housing? He wondered if there was any strategic plan to actually execute anything?

City administrator Steve Powers said that the city council’s first action would be to complete the sale of this property. He said he was not aware of any specific steps pending after that.

Collins ventured that there’s no strategic plan that the city is party to, other than “collect a bunch of money and use it for affordable housing?” “Council has no strategic plan …? If they do, that’s great,” Collins said. Powers responded to Collins by saying that the city is a party to work with the Washtenaw Housing Alliance (WHA) and the county’s office of community and economic development. There’s not a city-specific plan at this time, Powers said. WHA and the county’s office of community and economic development are talking about doing an assessment of affordable housing needs.

There’s a continuum, Guenzel said, from the very poorest to what is called workforce housing. He told Collins that there are a lot of discussions about it.

Historically, Smith said, there were funds in the affordable housing trust fund, and that has been spent down. There was no ability to plan for those funds, she said, because the balance is under $200,000 right now. It’s pretty nominal, she said, and you can’t build a unit for that amount. Guenzel noted that the question of whether some funds could be used for bricks-and-mortar versus supportive services was yet to be determined.

Collins had concerns about how prudent it is to allocate money toward a generally good idea without a clear strategy of what to do. “It’s great to do nice things. The DDA tries to do nice things, and we’re told that we’re a shadow government,” he said. If there’s no community strategy for addressing this, the DDA is doing something that might be nice in the future, he said, but he indicated he didn’t feel this was genuinely addressing the issue.

Smith replied that she didn’t necessarily think the DDA was the organization to tackle affordable housing. Smith noted the DDA has historically set aside money for affordable housing – and it’s now built into the DDA ordinance that the DDA is required to set aside $300,000 annually for affordable housing. She strongly supported the resolution because the DDA would then be able to leverage funds with the city and the county. She pointed to the last “resolved” clause that called on the city to follow the DDA’s example. Then those resources could be used to create a solid plan and move forward, she said.

John Mouat asked if it would be possible to take advantage of the city’s housing and human services advisory board (HHSAB). That would be a good entity to consult with in its advisory capacity. Powers indicated that he thought HHSAB had already had those kinds of discussions.

Outcome: The board unanimously approved the resolution waiving the DDA’s interest in proceeds of the sale of the former Y lot.

Proceeds of the Y Lot Sale: Parking Contract

Toward the end of the meeting during communications time, John Splitt indicated that he had some concerns about the sale of the former Y lot, based on the contract – under which the DDA manages the public parking system for the city. Under the contract, he said, the DDA is supposed to be given notice about the removal of parking spaces from the system. Sandi Smith stated that “We have not received written notice.”

Roger Hewitt responded to Smith by saying that he’d reviewed the most recent contract and he was not sure that the city actually is required give notice. DDA executive director Susan Pollay said that the contract refers to a “lease” and not a “sale.” Splitt said he just wanted to make sure that there was enough time to move equipment.

City administrator Steve Powers responded by saying that the city would be providing information about that, quipping: “It’s in the mail.” In connection with the sale of the property, the city would work through the removal of the parking equipment with the DDA, Powers said.

From the parking contract [emphasis added]:

The City shall not lease any portion of individual Facilities to third parties where such lease (either alone or cumulatively with other leases in such Facility) would reduce the number of usable parking spaces in such Facility by more than one percent (1%) or five (5) parking spaces, whichever is less, without first (i) providing DDA with thirty (30) days prior written notice; (ii) consulting with DDA about the location and terms of use of such leased spaces to reduce the impact of such use on DDA’s use of the Facility; and (iii) upon DDA’s written request delivered no more than fifteen (15) days after notice of the proposed lease, executing a side letter between City and DDA, the sole purpose of which is to make DDA whole for the loss of Gross Parking Revenue associated with the reduced parking spaces.

FY 2013 Audit

Board member Roger Hewitt made the motion to accept the DDA’s 2013 financial audit. Every year the DDA has an audit performed to ensure the DDA’s financial position is accurately stated. [.pdf of DDA FY 2013 audit]

DDA board member Roger Hewitt.

The DDA uses the same firm as the city [Rehmann], Hewitt said. The audit came back this year with an “unmodified” opinion, meaning there were no changes. He explained that the outcome essentially means that it was “clean” and that the DDA’s financial statements are an accurate reflection of the DDA’s financial position.

There was a suggestion, he allowed, to have an independent review of general journal entries. That’s been put in place, he said. A CPA the DDA has on contract will review those journal entries, he reported.

“Everything is just fine, according to our auditor,” Hewitt said. The conversation with the auditor was a good conversation that will help shape the budget in the upcoming year, Hewitt said.

Outcome: The DDA board voted unanimously to accept the FY 2013 audit report.

624 Church Street Parking CIL

By way of background, on Nov. 6, 2013 the DDA board approved the purchase of 48 parking permits under the contribution-in-lieu (CIL) program for a revision to a proposed residential development at 624 Church St. in downtown Ann Arbor. The spaces were approved to be provided in the Forest Avenue parking structure.

The CIL program allows a developer the option of purchasing permits to satisfy a parking requirement that would otherwise be satisfied by providing parking spaces on site as part of the project.

The original proposal for 624 Church, which received site plan approval from the city council at its March 4, 2013 meeting, was for a 13-story, 83-unit apartment building with approximately 181 beds. And for that version, the Ann Arbor DDA had authorized the project to purchase up to 42 monthly permits through the city’s contribution-in-lieu program.

The newly revised 624 Church St. project, which still needs planning commission and city council review, is larger than the original project, with roughly 122 units and 232 beds. The parking requirement is a function of the by-right premiums for additional square footage beyond the basic by-right of 400% floor area ratio (FAR). So the parking requirement for the revised project is greater than for the original version of the project. That’s why the DDA was asked to increase the number of permits from 42 to 48. The number of required parking spaces for the revised version of the project is actually 53, but five of them will be provided on site.

The DDA makes the decision about whether there’s adequate capacity in the parking system to allow the sale of additional monthly permits – because the DDA manages the city’s public parking system under a contract with the city.

Ann Arbor’s “contribution-in-lieu-of-parking” program was authorized by the city council on April 2, 2012. That program allows essentially two options: (1) purchase monthly parking permits in the public parking system for an extra 20% of the current rate for such permits, with a commitment of 15 years; or (2) make a lump sum payment of $55,000 per space. It’s option (1) that the 624 Church St. project is using.

624 Church Street Parking CIL: Public Commentary

Brad Moore, architect for the 624 Church St. project, appeared before the DDA board during public commentary time at the start of the meeting. He asked board members to consider modifying the terms under which the 624 Church St. project would be able to lease spaces monthly parking spaces under city’s contribution-in-lieu (CIL) program. Currently the project has been allocated 48 spaces for the minimum period under the CIL, which is 15 years. It’s come to the attention of the developer (Opus) that as it lines up financing, the financing companies would like to have two 10-year extensions added to the agreement, so that the length of the agreed-upon leasing of the parking spaces would cover at least a standard 30-year mortgage.

Moore said that Opus was asking that the agreement be amended – to add an option for two 10-year agreements that would exceed the minimum financing period. DDA executive director Susan Pollay told Moore that the item could be brought to the board in the next few minutes as an action item during the operations committee report.

624 Church Street Parking CIL: Board Deliberations

A draft resolution was distributed to the board at the meeting that would have addressed the issue that Brad Moore had raised. Roger Hewitt said the issue had only been brought to his attention that day.

He said that in his experience, funding for large commercial real estate projects tended to be for a 20-year financing period. He referred to Village Green’s City Apartments project as well as Ashley Mews as examples.

The resolution would add an additional five years to the existing agreement so that it could run, at the owner’s option, for 20 years instead of 15 years.

The indication from Moore was that the five-year extension would still endanger the financing for the 624 Church St. project. Hewitt indicated a reluctance to commit to a parking agreement for the length of time that Moore was requesting. He wanted to see some evidence that a 20-year financing plan – which in his experience is typical – is not possible before setting a new precedent.

Russ Collins ventured that the matter could be tabled until more information is received. Moore said that the parking would not necessarily be tied up in a single structure. Hewitt reiterated his concern that a 30-year term in this case would set a precedent for other developers.

Al McWilliams proposed an approach that would provide for optional renewal.

After some back-and-forth, Sandi Smith indicated that her preference would be for Moore to come back to the operations committee and allow the committee members to “chew on it” a bit more. The next operations committee meeting will take place on Dec. 18 at 11 a.m. Hewitt said.

Outcome: The board tabled the question of the CIL agreement in connection with the 624 Church St. project.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council, as well as public commentary. In addition to information reported earlier in this article, here are some highlights.

Comm/Comm: Main Street BIZ

During public commentary time at the start of the meeting, Ellie Serras introduced herself to the DDA board as the community relations director for the Main Street Business Improvement Zone (BIZ).

By way of background, the Ann Arbor DDA board voted on April 1, 2009 to award $83,270 to defray various costs associated with the formation of the Main Street BIZ. Those costs included accounting, auditing, operations and legal services.

On Dec. 4, Serras told the board she was there to bring them up to date on the organization’s activities and plans for the future, and to thank the board for their investment from the very beginning. A BIZ allows property owners to establish a vision and to select services compatible with that vision, she said. The DDA’s support of the Main Street BIZ allowed development of a successful campaign that has grown into a fully-functioning provider of important services that have improved the quality of the Main Street neighborhood, she told them.

The Main Street BIZ was established in 2010 according to the state enabling legislation, receiving overwhelming support from property owners in the three-block area of Main Street from Huron Street down to William Street, she said. The Main Street BIZ provides sidewalk snow removal, sweeping, handbill removal and landscape improvements in that area.

The services and contractors had been “skillfully managed” by the Main Street BIZ board of directors within the parameters of an annually approved budget, Serras said. Funding for the BIZ is generated by an assessment added on to the property owners’ summer and winter tax statements, she said. The BIZ board had been diligent in protecting the property owners’ investment and as a result, the existing fund balance is adequate so that even if this winter brings a severe snowstorm, the snow removal could be handled without imposing the winter tax assessment this year.

So the BIZ board has determined that no BIZ assessment would be on their 2013 winter tax statements. Even though the assessment will not be imposed, the area will still receive the same level of consistent services that it has over the last three and a half years, Serras said.

The Main Street BIZ is now currently contemplating the possibility of expanding its boundaries, she reported, based on positive comments from surrounding property owners. As it contemplates such an expansion, she continued, the Main Street BIZ would be using the blueprint that had been developed in connection with the grant that the DDA had awarded to the Main Street BIZ. The blueprint will be updated to include changes to the state statute and the procedures used for establishing a BIZ.

In appreciation to the DDA, Serras said, the BIZ board wanted to invite the DDA board to join the BIZ for coffee and pastries to talk about the BIZ – on Jan. 28 at 9 a.m. at the DDA offices. The BIZ would not be asking the DDA for anything, but wanted to express its appreciation for the DDA’s support. She alerted the board to the BIZ website: annarbormainstreetbiz.com

Comm/Comm: Downtown Citizens Area Advisory Council

Ray Detter addressed the board as chair of the downtown area citizens advisory council. He told the DDA board that the CAC has a holiday party every year when it discusses developments over the last year and things that it wants to work for in the coming year. He said the CAC supports more public art, more trees – and taking better care of those that are already in place. The group also supports improvements to the alley between East Liberty and East Washington near The Liberty Square parking structure, to make it a more public place, he said.

The CAC supports the DDA’s development of a streetscape framework plan, and its parking and transportation management plan. The downtown transportation plan is part of a transportation plan for the entire county, Detter said, that includes Zipcars, mopeds, the Ann Arbor Area Transportation Authority’s AirRide service and the getDowntown go!pass program. Detter continued by mentioning the north-south commuter rail project (WALLY), and the possible connector. The CAC wanted to avoid any need for additional above-ground parking structures, Detter said.

But the two most important areas of focus, he said, were population and retail. Retail will not thrive, he said, without a commitment to residential. The CAC applauded the success of Urban Outfitters, Bivouac and Renaissance, but was appalled by the loss of Selo/Shevel Gallery and Seyfried Jewelers.

Comm/Comm: State Theater

Ray Detter, speaking on behalf of the downtown area citizens advisory council, continued by saying that the CAC was committed to the survival of the State Theater as part of a historic theater district in downtown Ann Arbor. The theater helps define the essential identity of downtown Ann Arbor, he said. Detter noted that many people remembered the Campus Theater.

Detter acknowledged the demand for office space, but that can’t equal the value of the two theaters, he contended. The Michigan Theater, Detter said, had provided the venue for the first “talking pictures” in Ann Arbor in 1928 and the State Theater had been around since 1942. [DDA board member Russ Collins, who's executive director of the Michigan Theater, corrected Detter, pointing out that it was the Orpheum that was the first "talking picture" movie theater.]

The State Theater attracts 50,000 people a year, Detter said. Some people “might think it’s a dump at this point,” but there are ways of fixing it up, he said. Detter added that he was looking forward to the expansion of the Cinetopia series with the State Theater as one of the venues.

It’s a challenge to save the State Theater, Detter said. But the Michigan Theater board has taken the initiative to open a conversation with State Theater LLC to work on a way for the community to purchase and retain the State Theater as part of the “theater district.” The DDA should be a part of that process, Detter said. Other DDAs have done this kind of thing, “and we can do it, too.” Detter said he still remembered the $250,000 that had been given by the DDA for the lobby of the Michigan Theater.

Later in the meeting, Russ Collins followed up on Detter’s commentary by saying it was not a DDA matter per se. But regarding the State Theater, the Michigan Theater is in talks with the owners of the State Theater building. He was hopeful that would have a positive outcome with respect to preserving the cinema exhibition capability at the State Theater. He was happy with the owner’s willingness to talk.

Comm/Comm: New Board Members

Board chair Sandi Smith invited the new board members who’d been added since the last meeting to introduce themselves.

City administrator Steve Powers quipped that he would not need four minutes [the time limit afforded public speakers]. “It’s a pleasure to be with you,” he said. When mayor John Hieftje had asked him to serve, he’d agreed with enthusiasm, he reported. He appreciated and understands the importance of the DDA to the overall mission of the city. The city council had confirmed his appointment Monday night [Dec. 2]. He told the board he’d worked as city administrator for a little over 2 years. In that time, he’d gotten to know executive director Susan Pollay and had enjoyed the professional relationship between the city and the DDA. Powers saw his service on the board as strengthening that existing relationship between the city and the DDA.

Cyndi Clark introduced herself as a retail owner on Main Street for Lily Grace Cosmetics. A month ago, she’d just opened up a second business, she said – a spa. She was delighted to be on the DDA board. Her family lives in Ann Arbor and she was born and raised here, she said. She was delighted to be working with everyone. “It’s a full term for me!” she concluded.

Comm/Comm: Connector

By way of background on the connector study, the Ann Arbor Area Transportation Authority is currently conducting an alternatives analysis study for the corridor running from US-23 and Plymouth southward along Plymouth to State Street, then farther south along State to I-94. The alternatives analysis phase will result in a preferred choice of transit mode (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops. A previous study established the feasibility of operating some kind of high-capacity transit in that corridor.

Roger Hewitt participates on the technical committee for that study. The DDA has contributed funding toward the study.

At the Dec. 4 DDA board meeting, Hewitt reported that three public meetings had been held on the connector project recently. The board then watched a video created to explain the project. After presentation of the video, Hewitt described the public meetings as an effort to get input on the different route options. The turnout was pretty good, he said. The morning session wasn’t all that well attended, with perhaps 10 people, Hewitt said, but the noon and evening sessions each had over 25 people attend, he said. People had a lot of questions and a lot of information was exchanged, he said, but he allowed there wasn’t as much feedback on specific transit routes as they would have liked.

Unless you’re in the “nitty gritty of it,” Hewitt felt that it’s a bit overwhelming to consider all the possibilities. The next meeting of the technical committee would take place on Friday [Dec. 6], he said, with a follow-up meeting the next Monday [Dec. 9]. The study needs to be completed in the first quarter of 2014, he said. The outcome of the study would be the “preferred local option,” Hewitt said, and he’d keep the board up to date on that.

Joan Lowenstein asked Hewitt to confirm that in the context of the basic “boomerang” route, there would still be a significant impact depending on how the route was planned through the downtown. Hewitt confirmed that, and said there had been a lot of discussion about it. One possibility that had been suggested was to just head south on State Street. There are significant problems with the width of all streets. He’d been pushing for the idea that the route needed to come at least as far west as the Blake Transit Center [on Fifth Avenue].

Right now, the group is looking at two stations – one in the central campus (State Street area) and one in the center of downtown (Main Street area). Neither the route nor the station locations have been determined, he said. There was some desire not to cross Main Street, he noted. That’s because the amount of federal support would depend on a demonstration that there’d be a savings in travel time – because “that’s how the feds measure things,” he said.

If the route crosses Main Street, then it would have to cross back over Main Street to get to the South State Street area, Hewitt explained, and with the current traffic backups on Main Street, it would be easy to get backed up during rush hour in the Main Street area. So the group is looking to stay east of Main Street.

From left: John Mouat and Roger Hewitt.

John Mouat asked for an analysis of the economic impact of such a project. In that context, he asked about the planned timing of the project. Hewitt responded by saying, “We’re talking about a while!” He noted that this is the second phase of the study, after the initial feasibility study. That study had shown that the existing ridership justifies a more robust form of transit than is currently in place. The current phase is an alternatives analysis, which would determine the local “favorite” route and mode of transportation. After that an environmental study would be done.

After all of that, you “stand in line for federal dollars,” Hewitt said. For a project that meets the right criteria, the federal government might fund up to half the cost of the project, he said. The cost, depending on the route and the mode, could be as little as $100 million and as much as $500 million. After getting the federal dollars lined up, he continued, you’d have to line up the local match. The University of Michigan has stated publicly that they’d be involved, he said, without putting a particular dollar figure on their participation. After construction and ordering of vehicles, Hewitt said, we shouldn’t expect anything rolling for 10 years.

But this phase of the study, Hewitt said, would be completed in the next three months or so. He felt that a decision was pretty close for the downtown route. It would mean a pretty big change to downtown, Hewitt said. He allowed that it’s hard to get people excited about this now, when the project is 10 years off.

Comm/Comm: Bicycles, Alt Transportation

Keith Orr gave an update on the bike share program. A representative from B-Cycle, the selected vendor, had been brought in by the Ann Arbor-based Clean Energy Coalition (CEC). They looked at potential sites for locating stations. The few on-street spots were too narrow for a station, Orr reported. So as of now, there were no requests from the CEC of the DDA for an on-street parking spot. The CEC still anticipates an Earth Day opening in the spring of 2014. Right now, the plan is for 14 stations, Orr said. Stations will be located as far north as the University of Michigan north campus, and as far west as Ashley Street.

Orr also reported out on the first usage stats for the Bike House – an enclosed facility in the Maynard Street parking structure. Orr reported that people love having it there, saying that it’s largely a commuting option for people. The time records for when people use it show that people use it primarily at the beginning of the day and the end of the day, he said, but it’s not the same people all the time. He concluded that people who are using the Bike House are not relying on one mode of transportation. Discussion is taking place about other locations where similar facilities could be constructed, Orr reported.

And based on recent go!pass stats, it continues to be a very robust program, Orr said. [The DDA funds the go!pass program, which is administered by getDowntown, whose staff are employees of the Ann Arbor Area Transportation Authority.] More rides were taken and more cards were sold and used. Orr concluded that it continues to be a very popular and important program.

Comm/Comm: Winter Classic, The Puck Drops Here

By way of background, two major events are scheduled for New Year’s Eve and New Year’s Day in Ann Arbor: The Puck Drops Here and the National Hockey League’s Winter Classic Game. In connection with the NHL Winter Classic Game to be played on New Year’s Day, the Ann Arbor Area Convention and Visitors Bureau is hosting a New Year’s Eve event called The Puck Drops Here, which will mimic the dropping of the lighted ball in Times Square, but with a 6-foot diameter lighted “puck” that is being fabricated by METAL.

At the DDA board’s Dec. 4 meeting, DDA executive director Susan Pollay reviewed highlights of the strategy that will be deployed for the NHL Winter Classic and The Puck Drops Here events.

For New Year’s Eve, the Fourth and William parking structure, as well as the Forest structure, will have a flat rate fee. That way, people will not have to stop at the cashier booth on their way out.

On New Year’s Day, the city council had approved the street closures that will be in place. The NHL has asked that staffing be provided at public garages, Pollay said. That would allow for the reservation of a parking space in advance. If people reserve in advance, that would allow them to drive directly to a specific location.

Staff would also be handing out maps – mostly with an eye to help people after the game find the place where they’d parked. Pollay also told the board that the names of those businesses that are going to be open on Jan. 1 would be listed on the back of the map.

At all structures and lots, Pollay said, a flat fee of $5 would be charged on New Year’s Day. It’s meant to reimburse the DDA for its costs, not to make a lot of money.

John Mouat asked if anyone had developed a projection of how many people will be needing to park. Pollay said that to her knowledge, no. As much as possible, people are being encouraged to use the buses and shuttles that will be provided. They’re also working to communicate to people about the parking that’s available at locations away from the stadium.

City administrator Steve Powers noted that lawn parking will be allowed, as it is on home football game days.

Comm/Comm: Downtown Ambassadors

By way of background, for several years, the Ann Arbor DDA has had an interest in maintaining some kind of additional police patrol presence in the downtown. In the mid-2000s, the DDA entered into a contract with the city of Ann Arbor with the implicit hope that the city would maintain the dedicated downtown beat cops. That contract was structured at the time to pay the city $1 million a year for 10 years, with the city able to request up to $2 million a year for a maximum of $10 million.

That hope was not realized, and the DDA has since discussed the idea of providing additional funding for police or for “ambassadors.” The idea of ambassadors was explored in the context of subsequent re-negotiations of the contract between the city and the DDA under which the DDA operates the parking system. The DDA wanted to be assigned responsibility for parking enforcement (a function performed by the city’s community standards officers) and imagined that activity to be performed in an ambassador-like fashion.

At its June 3, 2013 meeting, the city council approved a resolution encouraging the DDA to provide funding for three police officers (a total of $270,000 annually) to be deployed in the DDA district. DDA board members visited Grand Rapids this fall to observe a new downtown ambassador program in that city. The initial report from that visit was given at the Ann Arbor DDA board’s Nov. 6, 2013 meeting.

At the board’s meeting on Dec. 4, Roger Hewitt reported that the operations committee had a lengthy discussion about the idea of hiring ambassadors, based on the visit by some board members to Grand Rapids to see the ambassador program there. A number of views were expressed, Hewitt said, but most people thought it was a good idea and that the Ann Arbor DDA should aggressively pursue it. At the next operations committee meeting, Hewitt said, it would be pursued. Personally, he said, he would like to see something in place for the summer of 2014, if it’s possible to move that quickly.

Comm/Comm: Prosperity

Joan Lowenstein reported out on the partnerships committee discussion about the A2 Ypsilanti Regional Chamber’s annual Impact conference.

Keith Orr and Joan Lowenstein.

The focus this year was based on a presentation made by Lou Glazer of Michigan Future Inc. Glazer’s work suggested that there’s a strong connection between prosperity and placemaking, and attracting young talent. The trends indicate that prosperous states show a higher proportion of wages from the “knowledge industries” – medical, technical and legal professions, Lowenstein said. Prosperous states also have a high proportion of college grads. Taxes don’t play as much of a role in prosperity, she said – it’s all about educational attainment and quality of place. Michigan and Ann Arbor are lagging behind other places in terms of the number of young professionals who are attracted here.

For example, she said, Madison, Wisc. has twice the number of young professionals as Ann Arbor does, Lowenstein reported. Glazer had said that Ann Arbor has an important role to play in prosperity, but the elements that are key to that need to be embraced: transit, private sector growth and density, she said. A lot of people want to attract families, but attracting young professionals will lead to that, she said, because people tend to establish families where they get their first job. Ann Arbor needs to do a better job of engaging young professionals in the community by giving them a better voice, Lowenstein said.

One of the panels at the Impact conference included young people who are reluctant to put themselves out in public positions, because of the nature of the media and social media – because you can get trashed by putting yourself out in public, Lowenstein said. She called it an unfortunate element of our modern life.

DDA board member Al McWilliams will be working on DDA communications.

Lowenstein also reported that the partnerships committee meeting will establish a subcommittee focused on communications. Al McWilliams and Rishi Narayan will head up that subcommittee, she said – noting that McWilliams is involved in that sort of thing all the time. [McWilliams is founder of the ad agency Quack!Media.]

January’s board meeting, which was originally scheduled for Jan. 1 – because it’s part of the first-Wednesday meeting pattern – was shifted to Jan. 8. There was no traction for the possibility of changing the day of the week or the noon meeting time for the regular board meetings.

Comm/Comm: Pedestrian Crashes

During public commentary time at the end of the meeting, Ed Vielmetti addressed the board about pedestrian safety issues. He noted the outcome of the city council’s recent action on the city’s crosswalk law [and the announcement by mayor John Hieftje that he would be vetoing the change the council had voted 6-4 to approve]. The current ordinance mostly addresses outside-downtown issues, Vielmetti said, with its reference to non-signalized crosswalks. In preparing for the city council meeting, Vielmetti said, he’d looked at about eight years of car crash data. What he’d noticed consistently is that the majority of pedestrian crashes happen in the downtown and campus area – probably because lots of people are walking downtown.

The narratives in some of the accident reports often describe how the pedestrian was crossing with a walk light, while the car had a green light and was turning, but didn’t see the pedestrian, Vielmetti said. This is an issue that’s within the purview of the DDA to address, he added. There’s only so much education you can do, with a transient student population. And there’s only so much enforcement you can do without adding to the police force. But the engineering could be addressed, he said – through careful attention to the built infrastructure where people cross the street, or near parking structures where there are a lot of pedestrian-car interactions.

Present: Al McWilliams, Cyndi Clark, Bob Guenzel, Roger Hewitt, Steve Powers, John Splitt, Sandi Smith, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Rishi Narayan.

Next board meeting: Noon on Wednesday, Jan. 8, 2014, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date]

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Waiver of that claim could lead to the transfer of the money to the city of Ann Arbor’s affordable housing trust fund, under a policy established by the Ann Arbor city council a year ago. The DDA board’s action came at its Dec. 4, 2013 meeting. [.pdf of unamended Dec. 4, 2013 draft DDA resolution on Y lot proceeds]

The DDA board resolution also calls on the city council to waive the city’s own reimbursement, so that the entire net proceeds of the sale could be transferred to the city’s affordable housing trust fund. The fund has been essentially depleted over the last several years. The DDA board’s resolution was amended slightly at the Dec. 4 meeting to include a specific amount to be waived ($1,439,959) and to highlight a request that the city council follow the DDA’s example.

The gross proceeds of the sale are defined by the $3.5 million paid by the city in 2003 for the property and a recent agreement to sell the property to hotelier Dennis Dahlmann for $5.25 million. That purchase agreement was approved by the city council at its Nov. 18, 2013 meeting. [.pdf of rider] [.pdf of sales agreement] The city originally purchased the property by exercising a right of first refusal, to prevent the acquisition of the site by the Ann Arbor Area Transportation Authority. The AAATA’s Blake Transit Center is located just north of the property, and the AAATA has a continued interest in using some portion of the property for staging buses, so that space on Fourth Avenue is not taken up with bus boarding areas.

The city of Ann Arbor has financed the $3.5 million under an arrangement with the Bank of Ann Arbor to make interest-only payments on that amount for the last decade – with the DDA shouldering roughly half of those interest payments. A balloon payment is due on Dec. 16, 2013. The DDA’s share of the interest payments has amounted to a total of $600,426 since 2004, according to a document provided at the board’s Dec. 4 meeting.

The DDA also incurred the costs of demolishing the former Y building and installing the equipment necessary to convert the lot for use as surface parking ($1,469,804). But the DDA has received a total of $1,043,277 in parking revenue from the lot since 2009, when it was converted. That’s balanced by parking operating expenses of $342,006. In sum, the DDA calculates that it might be able to claim reimbursement of $1,439,959. The DDA manages the public parking system under a contract with the city of Ann Arbor.

The former Y building offered 100 units of single resident occupancy low-income housing that the city council of a decade ago expressed a desire to see preserved in the downtown area, if not on that specific parcel. A year ago at the council’s Oct. 15, 2012 meeting, the council adopted a resolution that indicated the proceeds of the sale would:

“… first be utilized to repay the various funds that expended resources on the property, including but not limited to due diligence, closing of the site and relocation and support of its previous tenants, after which any remaining proceeds be allocated and distributed to the Affordable Housing Trust Fund …

Possibly relevant to the question of whether the DDA can simply waive any required repayment by the city to the DDA is the source of funds used by the DDA to make those payments. In recent years, the DDA has used parking funds to make the interest payments. To the extent that in earlier years, funds captured under the DDA’s tax increment finance (TIF) may have been used to make interest payments, it’s not clear if the DDA could simply allow the city to retain those funds as part of the proceeds of the Y lot sale. This issue was not addressed during the Dec. 4 board meeting.

This brief was filed from the DDA offices at 150 S. Fifth Ave., Suite 301. A more detailed report will follow: [link]

DDA board action on the $280,000 was taken at its Dec. 4, 2013 meeting, and came after the Ann Arbor city council had declined to approve an additional $280,000 budget allocation.

Downtown Ann Arbor Main Street light pole on the northeast corner of Main & William. Photograph is from the city of Ann Arbor, taken in April 2012.

According to the DDA’s resolution, staff will use the DDA funding to begin now with replacement of those poles most in need of replacement, with the remainder replaced in the summer of 2014.

The DDA board action was somewhat expected based on a mid-November email sent by city administrator Steve Powers to Ann Arbor city councilmembers, indicating that no further city council action would be required to get all 81 light poles replaced. Powers’ email indicated that on Oct. 31 and Nov. 1, city staff had inspected the Main Street light poles – and based on assessment of the city’s signs and signals staff, it was determined that 36 poles should be replaced within six months or sooner and that the remaining 45 light poles should be replaced within 1 to 2 years. It was the DDA that was developing a plan for the 45 remaining light poles, Powers wrote.

The issue has a history that’s interwoven with the oftentimes fractious relationship between the Ann Arbor city council and the DDA.

By way of additional background, in April 2013 when the council gave initial approval of the change to the city ordinance that regulates the DDA’s TIF (tax increment finance) capture, one argument against that move was that it would leave the DDA without sufficient revenue to pay for the roughly $580,000 cost of replacing the decorative light poles, which are described by some as an iconic feature of Main Street.

Replacement was characterized as an urgent public safety issue, because the bases of some of the poles are rusting. Various statements were made about the number of light poles that had failed, but responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced. As part of the council’s FY 2014 budget deliberations, the council altered the DDA’s budget and directed the DDA to allocate $300,000 toward the replacement of the Main Street light poles.

The council’s specific action on May 20, 2013 was to alter the DDA’s budget by recognizing additional TIF revenues of more than $568,000, and shifting $300,000 of that revenue from the DDA’s TIF fund to the DDA’s housing fund. The council’s budget resolution also recommended that the DDA spend $300,000 of its TIF fund on the Main Street light pole replacement. Earlier this year, in response to an emailed query from The Chronicle, city administrator Steve Powers indicated that the city council was expected to be asked to act on the matter either at its July 15 or Aug. 8 meeting. But the issue was not placed before the council until Oct. 21.

In timeline overview form:

• April 1, 2013: Initial approval of DDA TIF capture ordinance revision (Chapter 7). Main Street light poles were cited as a project the DDA might not be able to pay for if the Chapter 7 revisions were approved.
• April 15, 2013: City council approves an amendment to the Chapter 7 revision, put forward by Sally Petersen (Ward 3), which delayed application of the revised language until FY 2015.
• May 20, 2013: City council approves FY 2014 budget amendment that affects DDA budget:
  

  Whereas, The DDA is forecasted to receive $568,343 more in TIF revenues than anticipated in the proposed FY14 budget;
  Whereas, Council desires to support the public housing program in the DDA area;
  RESOLVED, The DDA TIF fund revenue and expenditure budgets be increased by $568,343 for the purposes of creating a one-time transfer;
  RESOLVED, The DDA Housing fund revenue and expenditure budgets be increased by $300,000 to reflect Council’s desire for the DDA to support affordable housing in the DDA area; and
  RESOLVED, Ann Arbor City Council requests that the DDA allocate at least $300,000 for the replacement of the light poles on Main Street.

• June 5, 2013: DDA board meets and executive director Susan Pollay reports the council’s action. She tells the board that she’s meeting with city staff to figure out how the light poles will be paid for.
• July 3, 2013: DDA board allocates $300,000 for the light pole replacement project at the same meeting it allocates $250,000 for other capital projects, and $59,200 to support the creation of a business improvement zone in the South University area. One “whereas” clause characterized the council’s action in a way that is not based on the wording of the city council’s May 20 budget amendment:
  

  Whereas, Through the 2013/14 budget approval process it was determined that the City would undertake this street light replacement in calendar year 2013, with the DDA allocating $300,000 toward the cost of the project, and the City allocating $216,000; [.pdf of complete DDA light pole resolution]

• Oct. 21, 2013: Ann Arbor city council rejects a supplemental budget allocation of $280,000 toward the downtown light pole replacement project on a 7-4 vote. It needed eight votes to pass.
• Dec. 4, 2013: DDA board approves $280,000 allocation from the remainder of its 2002 State Street Improvements Project and with funds to be assigned in the DDA’s FY 2015 TIF capital improvements budget.

This brief was filed from the DDA offices at 150 S. Fifth Ave., Suite 301. A more detailed report will follow: [link]

(Left) Ward 3 city councilmember Stephen Kunselman. (Right) DDA board member Bob Guenzel.

Now two and a half years later, a solid working relationship between the two entities has evolved – unmarred by political machinations, based instead on a clearly understood shared past, and consensus interpretation of relevant statutes and local laws governing tax increment finance capture.

That has led to a joint working session between the entities scheduled for Sept. 9, 2013. The session will offer an opportunity for members of the organizations to exchange appreciation and praise for the positive turn the relationship has taken over the last 30 months.

Heh. That’s a joke, as is the headline – the only accurate part of the preceding two paragraphs is the fact that a Sept. 9 working session is scheduled.

And it’s fair to say that the working session between the two groups would probably not be taking place unless it were contractually obligated – under an agreement ratified in May of 2011. The DDA operates the city’s parking system under that contract. In addition to the convening of a joint working session every fall, the contract stipulates that 17% of the gross parking revenues are to be paid to the city.

Parking money is just one of the two revenue categories over which the city and the DDA have been bickering. The other is the DDA’s tax increment finance capture (TIF), which is regulated by Chapter 7 of the city code. With an initial approval of changes to Chapter 7 already approved by the council on April 1, 2013, a joint DDA-city council committee was tasked on July 1, 2013 with making a recommendation on Chapter 7 changes to the council.

Aug. 26, 2013 meeting of the DDA-council committee, held in the basement of city hall.

Representing the council on the joint committee are Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA are Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.

Despite being tasked by council on July 1 to begin meeting immediately, the committee did not meet until eight weeks later, on Aug. 26 – after the Aug. 6 city council primaries. Here’s the political calculus: If Kunselman had lost the Ward 3 Democratic primary to Julie Grand, the balance of votes on the council might have shifted to clarifying Chapter 7 in the DDA’s favor.

Grand ran a campaign that was generally supportive of the DDA. But Kunselman has led the council’s effort to clarify Chapter 7 in a way that favors the city as well as the other taxing jurisdictions whose taxes are captured by the DDA. However, Kunselman prevailed – as did Ward 4 challenger Jack Eaton, who campaigned in part on the idea of limiting the DDA’s TIF capture through clarification of Chapter 7.

Because the committee waited until after the Aug. 6 primary to meet, the DDA members had a clearer idea on Aug. 26 about who they’d be dealing with in the near future. The outcome of the Aug. 6 primary meant that Kunselman brought a certain amount of confidence to the committee meeting on Aug. 26. At one point he stated: “… I don’t really have a lot of trust out in my neighborhoods about what the DDA does downtown, ok? And that’s how I have been able to galvanize my base, so to speak, to stay here and to keep this effort alive, so that we can get this ordinance changed … Some of that money, yes, should be returned to the taxing authorities.”

Now the only question mark on the committee is the independent Lumm, who faces a challenge from Democrat Kirk Westphal in the November election. Lumm has made it clear she supports a Chapter 7 revision that respects the interests of the other taxing jurisdictions. But Lumm’s re-election is not a foregone conclusion.

That’s why the opening gambit from the DDA’s side at the Aug. 26 meeting was to delay further, even though the council is scheduled to take a final vote on the Chapter 7 revisions at its Sept. 16 meeting. A future council that included Westphal, mayor John Hieftje, Chuck Warpehoski (Ward 5), Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Sabra Briere (Ward 1) might have six votes that potentially could support the current approach to TIF calculations. But among those six, I think even Westphal, Warpehoski and Briere are capable of independent and rational thought on the question of TIF capture.

The delaying tactic on Aug. 26 emerges in a fairly obvious way if you read through the meeting transcript. [.pdf of 40-page transcript]. DDA members were more inclined to want to talk about general arguments for the existence of a DDA, professing uncertainty about why they’d even been invited to the table. Kunselman, Lumm and Petersen made it clear they were there to talk about clarifying the TIF calculations, not more general themes. It wasn’t clear whose interests Taylor was upholding, but he aligned himself policy-wise – as well as socio-linguistically – more with other DDA board members than with his city council colleagues.

The Aug. 26 meeting was highlighted by a number of misstatements or incomplete statements of historical fact – some serious enough that I worry about the ability of some of those at the table that day to effectuate good public policy.

Still, I think the meeting offered a glimmer of hope – from a guy whose history with the city of Ann Arbor is approaching an anniversary. On Sept. 15, city administrator Steve Powers will have been on the job exactly two years.

Powers, I think, offers a contrast with the previous city administrator Roger Fraser. On April 16, 2010 Fraser barred me from a meeting of a “working group” of councilmembers and DDA board members. Shielded from public view, the group was sorting out the terms of a new parking agreement. Powers, on the other hand, toward the end of the Aug. 26, 2013 committee meeting, had this to say: “If the committee is done commenting, you should provide for public comment, as it’s a public meeting.”

This column includes a brief outline of some factual points worth remembering – because they were misstated or incompletely stated at the Aug. 26 meeting. But first, a point about words. 

Word Usage: Who’s the Attorney?

Even if you haven’t studied it in school, you probably have an awareness of how vocabulary choices can establish credentials, or let other people know that you are one of their kind.

For example, if I say by way of introduction to an urban hipster on a fixed-gear bicycle, “Is that a 44/16 you’re pushing?” that can be translated as follows:

Hey, I would like to make small talk about bicycles, and I know that 44/16 is a gear ratio, so tell me the answer to my question, before I size you up as just a poser who rides a fixie for the hip and groovy look, but doesn’t even know the first thing about gear combinations.

So early on during the Aug. 26 committee meeting, Ward 3 councilmember Christopher Taylor held forth as follows:

Taylor: … I think the ordinance as currently constituted is not clear to the novice 1-L looking at it, and [I] wouldn’t mind an ordinance that was.

What the 1-L?! If you remember the movie “The Paper Chase,” or if you can deduce it from your knowledge of Taylor’s background as an attorney, you might have a shot at understanding the reference – to a “first-year law student.” It seems to be a naming pattern unique to law schools. For example, first-year medical students are not 1-Ms. First-year journalism students are not 1-Js. In any case, Taylor’s reference was not universally and immediately understood by all the other non-lawyers in the room.

I think Taylor is bright enough to know that “1-L” is parlance peculiar to a specific social class. So why use a term that he could reasonably expect would not immediately be accessible to everyone in the room? One reason could be that Taylor was not the only lawyer at the table: Joan Lowenstein and Bob Guenzel – members of the DDA board – are also attorneys. So Taylor’s reference to 1-L could be translated as:

Hello, Joan and Bob, I see you lawyers over there, so let us note that we are the lawyers here –  we are us and they are them – and once again, lest anyone forget: We are the lawyers.

Earlier in the meeting, Lowenstein had tried to put Kunselman in his place with respect to his legal understanding of the contractual nature of the parking agreement between the city and the DDA:

Kunselman: … we can get rid of the parking agreement and take it back.
Taylor: Yes, it’s an agreement but …
Kunselman: … yet we can take it back. [laugh]
Taylor: It’s an agreement between two entities …
Lowenstein: … it’s a contract. Anyway, we won’t educate you about contract law, but go ahead.

A pertinent point about that parking contract, not mentioned by any of the three lawyers present, is the opportunity for terminating it, even when there’s been no breach. Everyone present at the committee meeting with knowledge of the contract was eager to state that the contract runs through the end of the DDA’s charter, in 2033. But apparently forgotten, even by the lawyers present, was the clause that allows either the DDA or the city to terminate the contract in year 11, with one year’s notice:

Each of the City and DDA may terminate this Agreement without cause, on June 30, [2022] and on the eleven (11) year anniversary thereafter, provided that written notice of termination is provided no less than three hundred and sixty five (365) days in advance of said termination.

Myth of Transparency

The transcript of the Aug. 26 meeting reflects a sharp exchange between Kunselman and Taylor on the question of whether the negotiations leading up to ratification of the May 2011 parking agreement were open and transparent. Taylor was adamant that the agreement on the parking contract had been reached in an open way and had not been passed in the “dark of the night.” Kunselman contended that the public conversation took place only after the decisions had been made out of public view.

For some grounding in actual fact, it’s worth noting that after a council-DDA “mutually-beneficial” committee was re-established on May 17, 2010, the conversations between the two bodies on the parking agreement moved at least in part into the public realm. I attended most of those meetings.

Before that, however, the conversation between the city council and the DDA was shielded from public view. Here’s a timeline overview. The April 16, 2010 date is worth noting.

• Jan. 20, 2009: City council passes a resolution asking the DDA to begin discussions of renegotiating the parking agreement between the city and the DDA in a mutually beneficial way.
• March 4, 2009: DDA board establishes a “mutually beneficial” committee to begin discussions of the parking agreement between the city and the DDA. On the committee: Roger Hewitt, Gary Boren, Jennifer S. Hall, and Rene Greff. The DDA’s resolution establishing their committee calls on the city council to form its own committee.
• May 20, 2009: During the mid-year DDA retreat, mayor John Hieftje states publicly that city councilmembers object to the membership of Jennifer S. Hall and Rene Greff on the DDA’s “mutually beneficial” committee.
• June 3, 2009: DDA board chair Jennifer S. Hall removes herself from DDA’s “mutually beneficial” committee, replacing herself with Russ Collins.
• June 15, 2009: Mayor John Hieftje nominates councilmembers Margie Teall (Ward 4), Leigh Greden (Ward 3) and Carsten Hohnke (Ward 5) to serve on the city council’s “mutually beneficial” committee, and they’re confirmed at the city council’s July 20 meeting.
• July 1, 2009: DDA board chair Jennifer S. Hall appoints Sandi Smith to replace outgoing DDA board member Rene Greff (whose position on the board is filled with Newcombe Clark) on the DDA’s “mutually beneficial” committee. Smith is also a city councilmember, representing Ward 1.
• August 2009: Leigh Greden is defeated in the Democratic primary by Stephen Kunselman.
• August-December 2009: Sandi Smith, the chair of the DDA’s “mutually beneficial” committee, reports at each monthly DDA board meeting that there is nothing new to report.
• Dec. 5, 2009: Dissolution of the DDA is included in an “everything is on the table” list for discussion at the city council’s budget retreat.
• January-April 2010: Roger Hewitt reports at monthly DDA board meetings that only informal discussions are taking place.
• April 16, 2010: The Ann Arbor Chronicle is barred from attending a meeting of a “working group” of city councilmembers and DDA board members.
• April 21, 2010: At a DDA partnerships committee meeting, Newcombe Clark gets assurance that a 7-day notice would be given before the full board would be asked to consider a $2 million transfer payment to the city.
• April 28, 2010: At a DDA operations committee meeting, a “term sheet” produced by the “working group” of the city council and DDA is unveiled. It’s intended to become the basis for an eventual new parking agreement. A key feature of the “term sheet” is that the DDA will assume responsibility for enforcement of parking meters. That responsibility was not ultimately included in the final agreement.

Myth of the Debt Clause Interpretation

The transcript of the Aug. 26, 2013 meeting reflects a claim that the DDA as an institution took on bonding debt, based on a particular interpretation of the Chapter 7 “debt override” clause. That interpretation is that as long as the DDA has debt obligations, it does not owe a return of any excess to the other taxing jurisdictions.

Hewitt: So I just want to be clear that you want to remove that ["debt-override"] clause completely?
Kunselman: Yes, which has already been done in the first reading.
Hewitt: But understanding that we have engaged in a huge amount of indebtedness based on that.

The last bonds for which the DDA accepted the debt service obligations were approved by the city council in February 2009. Later in the meeting, Hewitt returned to the implicit point – that historically, the debt clause had always been given the interpretation the DDA is currently giving it. That interpretation is that if the DDA had debt, then no excess TIF revenue needed to be returned to the other taxing jurisdictions:

Hewitt: Just to move things forward, I think, one of the big issues is that debt clause. The DDA and previous councils have operated under the assumption that the debt clause meant that there would be no refund because there was debt. That’s certainly how the DDA has viewed that. And the discussions with previous councils, that’s clearly how previous councils have viewed that. Now if you want to change, if you want to clarify that so that it does not apply, then I would like to hear from council that that is what you would like to do, because that would be a first step towards clarifying the ordinance.

And Taylor lent his support to the idea that the debt clause had consciously been given a specific interpretation over the years [emphasis added]:

Taylor: … Yes there is a debt override, and yes, there is a confusing way of creating a refund mechanism. The DDA has made pledges with respect to debt such that the refund mechanism has not frequently been triggered.

As a matter of historical fact, however, to the extent that the DDA or the city council has ever expressed a position on the “debt clause,” that implicit position has been that the clause does not excuse the DDA from returning excess TIF capture to the other taxing jurisdictions. In more detail, the DDA’s narrative in the spring of 2011 – when the Chapter 7 issue arose – was that the DDA had been unaware of the implications of Chapter 7 on its TIF revenue. However, once alerted to Chapter 7 by the city treasurer at that time, the DDA took 18 days to study the question before concluding that the return of excess TIF was owed to other taxing authorities – dating back to previous years, not just 2011.

Only when challenged on the methodology of its calculations, which made a difference on the order of $1 million per year, did the DDA reverse its position – by citing the “debt clause” of Chapter 7. The clause is most naturally read as a requirement that debt obligations be satisfied before non-debt obligations – like administrative staff salaries. The DDA’s preferred interpretation – that the clause lifts a stated restriction on TIF revenue already expressed in the ordinance – just isn’t plausible.

The fact that the DDA did not cite the debt clause in the spring of 2011 – when it made repayments of excess TIF covering that year and prior years – indicates that the DDA did not then, or in years before that, think the debt clause had an available interpretation under which the excess TIF return obligation could be excused.

The timeline, which undercuts the implications of statements made by Hewitt and Taylor at the Aug. 26 committee meeting, is as follows:

• 2011-April-28: City of Ann Arbor chief financial officer Tom Crawford steps in as interim city administrator in the wake of Roger Fraser’s departure.
• 2011-April-29: City financial staff notice the implications for TIF capture that are written into the city’s 1982 ordinance, which established the DDA. The timing of the discovery was reported by mayor John Hieftje at the DDA board’s May 2 meeting. In summary strokes, the ordinance provides that if the rate of growth in taxable value is more than what was anticipated in the TIF plan, then the DDA would capture only half of the increment on that additional value.
• 2011-May-02 (noon): The Ann Arbor DDA board was expected to ratify its side of the contract with the city of Ann Arbor under which it would continue management of the city’s parking system. Instead, it was announced that the board would be tabling the vote on the parking contract pending a closer review of the excess TIF capture issue.
• 2011-May-02 (7 p.m.): Ann Arbor city council strikes the city-DDA parking contract approval from its agenda.
• 2011-May-16: Ann Arbor city council begins its second meeting in May, at which it must approve the FY 2012 budget. The council does not vote on the budget, but recesses the meeting until May 23.
• 2011-May-20: At a special meeting, the Ann Arbor DDA board approves a parking contract with the city of Ann Arbor that provides 17% of gross parking revenue to the city of Ann Arbor. The approved contract includes a provision that the city of Ann Arbor will backstop the DDA’s financial position if the DDA’s fund balance falls below $1 million.
• 2011-May-20: At the same meeting, the Ann Arbor DDA board votes to affirm the excess TIF calculations raised at the May 2 meeting. The DDA calculates that a total of $1,185,132 should be returned to taxing authorities that levy property taxes in the downtown district. The city of Ann Arbor’s share of that is $711,767, with the remaining money owed to the Ann Arbor District Library, Washtenaw County and Washtenaw Community College. The method of calculation is “year-to-year” not cumulative, and is based on the “optimistic” projections in the DDA’s TIF plan.
• 2011-May-23: City council convenes the continuation of its May 16 meeting, but immediately recesses, likely in order to prevent any discussion of a proposal from Stephen Kunselman (Ward 3) to return responsibility for the public parking system from the DDA to the city of Ann Arbor’s public services area.
• 2011-May-25: “Mutually beneficial” committees from the city council and the DDA board meet and finalize language on fund balance underwriting and required consultation with the city council on rate changes in the proposed parking agreement.
• 2011-May-31: Ann Arbor city council votes to waive the $711,767 in excess TIF capture that the DDA calculated it owed to the city of Ann Arbor.
• 2011-May-31: At the same meeting, the Ann Arbor city council ratifies the city-DDA parking contract, which provides 17% of gross parking revenue to the city of Ann Arbor. The approved contract includes a provision that the city will backstop the DDA’s financial position if the DDA’s combined fund balance falls below $1 million.
• 2011-July-27: At a special meeting, the DDA convenes in closed session and emerges to approve a resolution that reverses its previous position on excess TIF capture. Now the DDA contends that the local ordinance doesn’t actually place a limit on its TIF capture.
• 2011-August-15: Ann Arbor District Library board holds a closed session as part of its regular meeting to review the written legal opinion of its legal counsel with respect to the excess TIF capture. AADL board director Josie Parker indicates that the AADL will ask its legal counsel, Hooper Hathaway, to prepare a response to the DDA’s new position on the interpretation of the ordinance.
• 2011-November-02: Ann Arbor DDA holds a closed session to review the written opinion of its legal counsel on the issue of excess TIF capture.
• 2011-December-07: Ann Arbor DDA holds a closed session to review the written opinion of its legal counsel on the issue of excess TIF capture.
• 2012-Mar-19: Ann Arbor District Library director Josie Parker tells The Chronicle that AADL is not pressing the matter of the excess TIF, but is open to a conversation with the DDA.
• 2012-Mar-19: Stephen Kunselman (Ward 3) announces he’ll be bringing forward a resolution to address the issue of excess TIF capture. Kunselman has not consulted with AADL on the issue.
• 2012-Mar-21: During a budget update at the Washtenaw County board of commissioners meeting, the $348,000 received by Washtenaw County from the DDA in TIF reimbursement is presented as one of several factors contributing to the better-than-expected financial condition for the county.

Myth of the Opt Out: Other Taxing Jurisdictions

The DDA captures some of the taxes of other jurisdictions  – the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. The current state enabling legislation for DDAs includes an opt-out provision for other taxing jurisdictions. So there’s a widespread misunderstanding that back in the early 1980s when the Ann Arbor DDA was established, other jurisdictions had an opportunity to opt out.

However, as The Chronicle has previously reported, that provision in the state statute was added after the Ann Arbor DDA was established. And when the Ann Arbor DDA was renewed in 2003, none of the opt-out conditions were triggered. So there has never been an opportunity for other taxing jurisdictions to opt out.

The Aug. 26 committee meeting revealed a lack of command of these historical facts by Taylor, when he ventured that the other taxing jurisdictions had “signed up for it” – that is, not chosen to opt out of the Ann Arbor DDA’s tax capture. [emphasis added]:

Kunselman: I don’t feel good just because I can take someone else’s money, and keep it.
Taylor: I guess: They signed up for it.
Kunselman: Well, the library didn’t. They would like some of their money back.
Taylor: And they haven’t come to us to say that they ..
Kunselman: … they wrote us a letter. They wrote [mayor John] Hieftje a letter.
Taylor: In 2000-what?
Kunselman: What, two years ago? [It was January 2012 when the letter was written.]

Coda

I’ve been told by one public official that it’s not their job to give a correct recitation of history – because that’s The Chronicle’s job. If you’d like to watch the city council and the DDA board make a small bit of history tonight, you can watch live proceedings on Channel 16, streamed online by Community Television Network.

The council-DDA work session will immediately follow a special meeting the council is convening at 7 p.m. to hold a closed session under the Michigan Open Meetings Act – to discuss labor negotiation strategy.

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of public bodies like the Ann Arbor Downtown Development Authority and the Ann Arbor city council. 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!

Ward 3 councilmember Stephen Kunselman (left) attended the Sept. 4, 2013, meeting of the DDA board. He chatted with mayor John Hieftje before the meeting start. Hieftje is a member of the DDA board. (Photos by the writer.)

The renovation is part of the county’s overall space plan, approved by the board of commissioners at its July 10, 2013 meeting. The space plan calls for modifications to the Annex so that it can house the county’s Community Support & Treatment Services (CSTS) department. The cost of the renovations at the Annex, which would include a new lobby and “client interaction” space, would be about $1 million, according to the DDA board resolution. [.pdf of DDA resolution on the Annex] The Annex has housed the county’s office of community and economic development, office of infrastructure management, and the public defender’s office. Those offices are being moved to other leased and county-owned space.

Not described at the DDA’s board meeting was the backdrop of the grant award to the county, which evolved from a conversation between county administration and the DDA about ways the DDA could help the county address its budget deficit. A pitch from the county had been to re-open the agreement under which the county purchases monthly parking permits in the city’s public parking system, which the DDA manages. The alternative proposed by the DDA was to make a one-time $300,000 grant  – to help fund a project for which the county had already identified funding.

Also not mentioned among the several updates given during the Sept. 4 DDA board meeting was an Aug. 26 meeting of a joint DDA-council committee. That committee had been established by the Ann Arbor city council at its July 1, 2013 meeting to work out a recommendation on possible legislation to address an ongoing controversy about DDA tax increment finance revenue. Not much forward progress was made at that committee meeting.

The city council has already given initial approval of changes to the ordinance language that would clarify the amount of tax increment finance capture (TIF) revenue received by the DDA . The clarification currently under consideration does not work out in the DDA’s favor. A final vote of approval appeared on the council’s Sept. 3, 2013 agenda – the day before the DDA board met – but the council decided again to postpone a final vote.

At their Sept. 4 meeting, DDA board members also got a look at a draft five-year plan of projects that has now been generated, partly in response to pressure from the city council – dating back to April of this year – asking the DDA to explain what projects would not be undertaken if the DDA didn’t continue to receive TIF revenue based on its preferred interpretation of the city’s ordinance.

Highlights of other updates that were given at the Sept. 4 DDA board meeting included a review of the preliminary end-of-year figures for the public parking system and the rest of the DDA’s funds. Overall, the DDA’s financial picture was better than budgeted. That difference is due to the timing of various capital costs.

For the parking system, the year-end picture was consistent with the trend throughout the year. Revenue generated by the parking system was up by 11.9% ($19.09 million) compared to the previous fiscal year, while the number of hourly patrons was down by 1.96% (2,232,736).

Low attendance at the board’s meeting was partly a function of the fact that two of the seats are currently vacant. One of the seats could potentially have been filled by the city council through confirmation of Al McWilliams’ nomination at its Sept. 3, 2013 meeting. However, as the nine councilmembers present debated his confirmation, mayor John Hieftje withdrew it, at least for the time being.

McWilliams’ confirmation would have needed six votes on the 11-member council – and the outcome was dubious based on conversation among the nine attendees at the council table. Some councilmembers questioned whether McWilliams’ might have a recurring conflict of interest based on the work his advertising firm, Quack!Media, does for the Ann Arbor Area Transportation Authority and the allocations that the DDA makes to the AAATA’s go!pass program. That allocation amounted to $479,000 this year, and was approved at the DDA board’s March 6, 2013 meeting.

The Sept. 4 DDA board meeting was somewhat unusual in that no one from the public chose to address the board during the session at either of the two points on the agenda for public commentary.

Washtenaw County Annex Grant

The board was asked to support renovations to the building at 110 N. Fourth in Ann Arbor (known as the Annex) so that it can house the county’s Community Support & Treatment Services (CSTS) department. [.pdf of DDA resolution on the Annex] The cost of the renovations at the Annex, which would include a new lobby and “client interaction” space, would be about $1 million, according to the DDA board resolution.

Washtenaw County Annex Grant: Background

CSTS provides a variety of client services to individuals with mental illness, developmental disabilities and substance abuse disorders. The Annex has housed the county’s office of community and economic development, office of infrastructure management, and the public defender’s office. In the space plan approved by the Washtenaw County board of commissioners at its July 10, 2013 meeting, those offices are being moved to other leased and county-owned space.

The County Annex building at 110 N. Fourth was built in 1904 and recently has housed several county units, including the public defender’s office and the office of community and economic development. (Chronicle file photo.)

When the county board approved the renovations associated with the county’s space plan, they were briefed that the total cost of all the renovations – not limited to those at the Annex – would be around $5 million. At the time Greg Dill, the county’s infrastructure management director, said no county general fund dollars would be used for the projects. Funding would come from several sources, Dill explained: (1) $1 million from the 1/8th mill fund balance; (2) $650,000 from the facilities operations & maintenance fund balance; (3) $650,000 from the office of community & economic development reserves; (4) $500,000 from the tech plan fund balance; and (5) $2.2 million from the county’s capital reserves.

According to the county’s website about the space plan, the Washtenaw Community Health Organization (WCHO) – which has a contract with CSTS to provide treatment services – was planning to fund the entire build-out of the Annex as well as the relocation of CSTS staff to the Annex.

The DDA became involved when county administrator Verna McDaniel and other senior staff met with DDA executive director Susan Pollay within the past few weeks to talk about how the DDA might help address the county’s projected structural budget deficit of $3.9 million in 2014. The county pays the DDA nearly $400,000 annually for parking permits, and had proposed the possibility of opening up a long-term parking agreement to renegotiate that amount. McDaniel told The Chronicle that the DDA proposed offering the grant for the Annex renovations instead.

Bob Guenzel, former Washtenaw County administrator, is a member of the DDA board. Guenzel was absent from the Sept. 4 meeting.

Washtenaw County Annex Grant: DDA Board Discussion

The grant to Washtenaw County for improvements to the Annex building was introduced by John Splitt.

Splitt asked executive director of the DDA Susan Pollay to explain the resolution. Pollay said that one of the roles of the DDA is to support all of the various uses of downtown – business and residential – and also government services. She called Washtenaw County an ally of the DDA, and described how the county is very committed to the downtown. Many of the county’s operations have been brought to the downtown, she said. She described how many of the county’s outreach services are planned to be provided in the Annex building.

The challenge that the county has been struggling with, Pollay continued, is that the building is currently not configured in a way that’s suitable for the CSTS clients. So the county has developed a plan to retrofit the building, which includes a lobby and other space. Pollay reported that she’d been talking with Washtenaw County administration members to try to find a way to be supportive. The plans of the county are now at the point where they can begin moving forward, Pollay said. The project as a whole has about a $1 million budget, she said. She described the $300,000 as consistent with the DDA’s 10-year plan and also in keeping with the DDA’s mission.

Joan Lowenstein asked Pollay if it was fair to say that without the DDA’s contribution, the county probably wouldn’t go forward with the renovations. Pollay declined Lowenstein’s gambit by saying, “I don’t know that.” But Pollay did describe the DDA’s contribution as a “significant part” of the project moving forward. It absolutely helps makes it possible, Pollay contended.

John Mouat described his downtown office as providing a good vantage point to see the connection between the Annex and the rest of downtown. You can watch the number of people who go by out his window, he said. [Mouat is an architect with offices at 113 S. Fourth Ave.]

Mayor John Hieftje indicated support for the grant, saying that it’s consistent with the goals of the DDA. Washtenaw County has some significant budget issues that it’s working through right now, he said. He also noted that the DDA Act explicitly highlights the ability of a downtown development authority to help finance government buildings in the downtown area. So Hieftje felt that the grant met the criteria of the statute.

Outcome: The seven members of the board who were present at the meeting voted unanimously to approve the $300,000 grant to Washtenaw County for improvements to the Annex building.

Washtenaw County Annex Grant: Connection to Council, Light Poles

In attendance at the DDA’s board meeting were two city councilmembers – Sabra Briere (Ward 1) and Stephen Kunselman (Ward 3). Neither addressed the board formally during the meeting. Briere typically attends the meetings, while Kunselman does not.

Kunselman told The Chronicle he attended the meeting partly out of interest in the question of whether the DDA had the ability to pay the entire cost of the replacement of decorative pedestrian light poles on Main Street, given its allocation to the Washtenaw County Annex project. In early 2012, two of the light poles had fallen – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced.

At its July 3, 2013 meeting, the DDA board had approved a resolution allocating $300,000 for the replacement of decorative light poles on Main Street. The total estimated cost of the project is $516,000 for 81 light poles. Based on the DDA board’s resolution, it was DDA’s expectation that the city of Ann Arbor would make up the difference of $216,000.

DDA board member Joan Lowenstein.

The DDA’s July 3 resolution indicated that the city of Ann Arbor’s budget approval process this year had determined that the city would allocate $216,000 for the project. What the Ann Arbor city council actually did on May 20, 2013 was to alter the DDA’s budget by recognizing additional TIF revenues of more than $568,000, and shifting $300,000 of that revenue from the DDA’s TIF fund to the DDA’s housing fund. The council’s resolution also recommended that the DDA spend $300,000 of its TIF fund on the Main Street light pole replacement.

In response to an emailed query from The Chronicle, city administrator Steve Powers indicated back in July that the city council would be asked to act on the matter either at its July 15 or Aug. 8 meeting. That timeframe has slipped, and no council action has been taken on the Main Street light poles. Public services area administrator Craig Hupy, responding to the same query, explained back in July that it wasn’t yet clear if the council action would include an additional appropriation, or if it could be handled within the existing budget.

At the DDA’s Sept. 4 board meeting – during discussion of a five-year draft capital plan – DDA board member Joan Lowenstein characterized the light pole situation from her perspective. She was responding in part to the idea of staying flexible with respect to which projects were implemented, and she indicated that flexibility could be compromised if the DDA were “hogtied” in some way. As an example of the hogtying, she cited the street light poles on Main Street, which the DDA was planning to replace. Lowenstein said: “But then the city council decided to screw around with our budget, so that we couldn’t spend our money on replacing those.” For people who are wondering what is going on with the streetlights, Lowenstein said, they are tied up in the bureaucracy of the city.

Five-Year Draft Project Plan

The DDA has developed a draft list of projects partly in response to pressure from the city council – dating back to April of this year – asking the DDA to explain what projects would not be undertaken if the DDA didn’t continue to receive TIF revenue based on its preferred interpretation of the city’s ordinance. The project list was introduced at the Sept. 4, 2013 DDA board meeting.

By way of introducing the draft plan, which had been reviewed at the operations committee meeting the previous week, DDA executive director Susan Pollay said that one of the things discussed this spring after many years of focusing on very large capital projects, was the fact that the DDA would be ending a cycle of major projects. She alluded to the metaphor of the “pig in the python” used to describe the Library Lane underground parking structure, which was completed last year.

This summer, the DDA had acquired the First and Washington garage, which is located in the City Apartments development. What had been done at the previous week’s operations committee meeting, Pollay reported, was to assemble all of the projects so that they were listed all in one place. The goal was not to compare one project versus another. Pollay felt the committee had done a good job of setting forward the idea of why the projects are on the list and how they support the vision that the DDA is striving for.

Pollay read aloud from the vision statement that’s a part of the draft document:

A walkable, vibrant, authentic, attractive, historic, inclusive, growing, diverse, multi-season downtown, full of lots of things to do, teaming with downtown residents and healthy locally-owned unique businesses, the community’s job and commercial center, a place of shared prosperity, and nationally known as a center for innovation and entrepreneurism.

In outline form, reduced from the more detailed description [.pdf of draft five-year plan], here’s what the draft five-year project plan covers:

Near Term Projects (2013-2018)

Streetscapes

• South University: $2.5-$3 million
• William Street: $5 million
• Huron Street: $5 million
• N. Fifth Ave. (brick streets): $5 million
• S. Main Street: $500,000-$800,000

Sidewalk Maintenance

• Routine maintenance annual cost: $50,000-$75,000
• Wayfinding updates: $50,000
• E. Liberty Street tree pit expansion: $75,000
• Traffic signal box wraps: $50,000

Infrastructure

• Fourth & William parking structure elevators: $2.25 million
• E. William sanitary sewer: $250,000
• Bell Tower alley: $250,000
• W. Huron alley repair and improvements: $300,000
• Additional ePark machines: $850,000

Transportation

• Restore the LINK (circulator bus) annually: $100,000-$250,000
• Add electric vehicle charging units to parking structures: $100,000
• Express bus annually: $50,000-$100,000
• Bike House #2: $30,000
• In-street bike racks: $4,000 each
• Crosswalk repairs: $15,000 per intersection
• Pilot Ypsi/Ann Arbor passenger rail project (initial study): $50,000

Business Encouragement

• Fourth & William parking structure. Build out first floor space along 4th Avenue and William Street: $600,000
• Business Improvement Zones: $50,000 each
• Lodging/conference feasibility study: $50,000
• Marketing campaign for downtown annually: $50,000

Housing

• Grants to encourage the creation of housing affordable to individuals: Grant program to be determined.

Downtown Parks

• Liberty Plaza Park: $175,000
• Farmers Market winter enclosure study: $90,000

Community Services

• County Annex lobby improvements: $300,000
• City Hall environmental controls upgrade: $90,000
• S. State St. road resurfacing and sidewalk expansion: $675,000
• S. Division resurfacing: $320,000
• Liberty/First intersection: $362,000

John Mouat call the draft a terrific start, saying that it pulls together a lot of the things the board has talked about.

Sandi Smith wondered if it was realistic to expect that the projects would be completed in five years. Back and forth between Smith and Pollay indicated that even if some projects might not be completed within a five-year time frame, it was still important to plan for them now. They indicated that if a pressing need comes up, the DDA needs to be flexible and nimble enough to re-priortize.

Russ Collins felt that the five-year plan was not a policy statement, but rather was a way to anticipate what might be a good way to invest the DDA’s money – noting that the DDA doesn’t have any planning authority. The DDA needs approvals from the city council to undertake projects. Collin said the DDA is trying to anticipate needed work as best it can – in coordination with city departments, city council, and private developers. Sometimes the DDA produces documents and they are misunderstood as a statement of policy, Collins said.

Outcome: This was not a voting item.

Parking System

The DDA manages the city’s public parking system under a contract with the city of Ann Arbor. A joint DDA city council work session is scheduled for Sept. 9, 2013 under the terms of the contract, which state in part:

Joint Working Session. As part of the annual established calendar for City Council Working Sessions, City Council shall designate one working session in the fall of each calendar year as a joint working session with the DDA. The agenda for the working session shall be prepared by the City Administrator in accordance with Council Rules and in consultation with the Executive Director of the DDA, provided that such agenda shall include
(i) the DDA’s evaluation of any meter parking rate increases effected during the foregoing year, including, without limitation, the public input associated therewith; and
(ii) a discussion regarding any then-contemplated future meter parking rate increases, which discussion shall satisfy the DDA’s City Council consultation obligation under Section 2(k). It is recommended that a portion of such agenda be dedicated to a discussion of operations under this Agreement and the utility of creating a joint study committee to address areas of mutual interest.

Parking: Year-End Report

John Splitt gave the parking report in Roger Hewitt’s absence. For the last quarter of the fiscal year, he noted revenues were up, as were expenses. He attributed increased expenses for the quarter to grants, capital costs and costs related to bond payments and the installation of new automated equipment.

For June 2013 – the last month of the fiscal year – Splitt noted that revenues were up 7.41% and hourly patrons were down by 7.7% compared to the same month last year. He described the pattern as staying on track in terms of revenues. He ventured that the reduction in hourly patrons could mean that fewer people are staying longer. “That’s a statistic that you can take for what it is,” he concluded. For the last quarter of the fiscal year, revenue was up 11.67% and hourly patrons were slightly down, by about 0.42%, Splitt said.

John Mouat noted that obviously there had been a big drop in revenue at the Washington and Fourth Street parking structure. He ventured that was probably due to the street closure on Fourth Avenue during the major street reconstruction work over the summer. Mouat suggested that it would be great in the future, if the DDA knows about street closings that would be implemented during the year, if impact on revenues could be built into projections for the year.

Splitt summarized the art fair parking numbers as not quite matching the numbers from the previous year, but he felt that the parking system had done quite well during the period of the art fair, considering the weather this year. [.pdf of parking system revenue including 2013 art fairs]

Parking: Four-Year Summary in Charts and Graphs

Total Revenue by Facility. (Graph by The Chronicle with data from the Ann Arbor DDA)

Revenue Per Space, Focus on Structures. (Graph by The Chronicle with data from the Ann Arbor DDA)

Revenue Per Space, Focus on Surface Lots. (Graph by The Chronicle with data from the Ann Arbor DDA)

Total Hourly Patrons. (Graph by The Chronicle with data from the Ann Arbor DDA)

Total Revenue. (Graph by The Chronicle with data from the Ann Arbor DDA)

Parking: Pilot Permit Program

DDA executive director Susan Pollay described how last spring there had been a robust dialogue about how to provide monthly permits in a fair way, when demand is larger than supply. So this summer, the DDA had started a pilot program in the South University area. The concept behind the pilot program was that instead of selling parking permits to individuals, the DDA would engage property owners and assign a number of parking permits to them based on the square footage of their buildings. Letters have been sent out to property owners, Pollay said, and she thought the DDA would be flooded with requests. [For general background on the monthly parking permit system, see: "Column: Rules, Parking, Transportation"]

However, Pollay reported that almost none of the property owners were interested in managing the parking permits on behalf of their tenants. From the point of view of property owners, Pollay ventured that it is easier to have the DDA to manage the demand and to maintain the waiting list.

During the Sept. 4 board meeting, it was also reported that the newly-built Library Lane underground parking garage now has a waiting list for monthly permits. Pollay recalled that when the structure was being planning, there were those who were concerned that the city would have too much parking. Now 50 people are on the wait list for Library Lane permits, Pollay said, because of the DDA’s commitment to keeping spaces open for Ann Arbor District Library patrons. [The structure is adjacent to the downtown library, but owned by the city.]

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: New Board Member – Rishi Narayan

At the start of the meeting, DDA board chair Sandi Smith invited the board’s newest member, Rishi Narayan, to give a 30-second synopsis of who he is. [Narayan's appointment to the DDA board was confirmed by the city council at its Aug. 19, 2013 meeting.] Narayan quipped that he could be summed up in less than 30 seconds. He told the board that he had come to Ann Arbor from the Okemos and Lansing area to attend college, and had remained in Ann Arbor during that time, with a brief stint in Berkeley, California after he got married.

He had moved back and forth between Berkeley and Ann Arbor while his wife was finishing her Ph.D. at the University of California at Berkeley. He described himself as involved in various things in Ann Arbor but his main business is Underground Printing. He had founded that business with a business partner who was his best friend growing up, who also lives in Ann Arbor now. They are no longer Lansing-ites. “That’s me in a nutshell, and I’m looking forward to joining the board,” Narayan concluded.

Comm/Comm: Year-End Financials

In Roger Hewitt’s absence, John Splitt gave the update from the operations committee, which included the year-end unaudited financial figures. Splitt indicated that Joe Morehouse, the DDA’s deputy director, could answer any specific questions from board members. He described the TIF budget as slightly over budget with respect to the excess of revenues over expenditures. But the parking budget was significantly over, Splitt reported.

He confirmed with Morehouse that the better-than-budgeted financial picture relates to the timing on items that the DDA needed to pay. [This includes a delay in acquiring the parking deck portion of the City Apartments project at First and Washington, as well as delay until after July 1 of some parking structure maintenance work.] Splitt summed up the budget variances as a matter of timing.

Based on The Chronicle’s arithmetic, the entire DDA budget looks to be better than budgeted by about $4.8 million. [.pdf of unaudited year-end FY 2013 figures] Overall, based on its most recently revised budget, the DDA had projected expenses would exceed revenues by $5.1 million in a $24.6 million revenue budget. Instead, the unaudited figures for the end of FY 2013 (which ended June 30, 2013) show the deficit amount will be closer $0.38 million.

Comm/Comm: 618 S. Main Project

Joan Lowenstein, reporting out from the board’s partnerships committee, gave an update on the 618 S. Main project. The project team attended the last partnerships committee meeting, she reported, and they had proposed some streetscape improvements for the project site, extending up to Ashley Mews. Those improvements included paving, widening, and planting enhancements. The committee had given some input on the proposed design and asked questions about the project timing, she said.

The streetscape plan is going through review with city staff members, Lowenstein continued, and is part of the DDA’s brownfield grant to the 618 S. Main project. The DDA board would be up considering approval of changes at a future meeting. She characterized the brownfield grant as input and money from the DDA that has allowed the project to be built.

Comm/Comm: Streetscape Framework Plan

At its July 3, 2013 meeting, the board had approved $200,000 of funding for developing a streetscape framework plan. John Mouat reported that in the following week, an RFQ (request for qualifications) would be issued for the streetscape framework plan. When responses come in, an evaluation process would take place, he said, to narrow down the list of consultants, who would then be invited to make proposals.

Comm/Comm: State of the Downtown

In her report out from the DDA’s partnerships committee, Joan Lowenstein said that the committee had reviewed the newest version of the State of the Downtown report. It had been released in August. Lowenstein described how the report really highlights the DDA’s role as “the place to go for information about the downtown.” Among the statistics she highlighted from the report were: 73% of all city special events take place downtown; 26% of jobs in the city are downtown; and 107 sidewalk cafes are located downtown. In the past year, 26 new businesses have been started in the downtown area. Supporting that activity, she continued, population downtown has grown by 56% since 2000.

Board chair Sandi Smith acknowledged DDA planning specialist Amber Miller for her work on the State of the Downtown report. Lowenstein called the report a great reference document with a lot of facts and figures.

Comm/Comm: Economic Collaborative Task Force

Reporting out from the DDA’s partnerships committee, Joan Lowenstein said the committee had received an update on the Ann Arbor economic collaborative task force. [The task force was established through a council resolution passed on May 20, 2013.] Lowenstein described the group as composed of the city of Ann Arbor, Ann Arbor SPARK and the DDA. The task force had met once before the July partnerships committee meeting took place, Lowenstein said. Primarily the task force had focused on the Ann Arbor SPARK five-year strategic plan, including various overlaps with the city of Ann Arbor and the DDA. That included helping to sell and develop the city property in the downtown.

Comm/Comm: Sidewalk Repair

John Splitt gave an update on sidewalk repair work in the downtown. This summer the DDA had been paying for mostly minor repairs to sidewalks, taking care of trip hazards and the like. All of the Americans with Disabilities Act sidewalk ramp work has now been finished, he reported. The final four ramps – the most difficult of them – had been completed this summer. Trees were being trimmed and planted. Essentially it was those issues that are visible that were being addressed this summer, Splitt concluded. The work is about to conclude for the season and next season it will start again.

Comm/Comm: Downtown Zoning Review

Reporting out from the downtown area citizens advisory council (CAC), Ray Detter reminded the board that at its previous meeting, he’d told them that the city planning commission’s executive committee was in the process of hiring a consultant to organize a public process to re-examine the downtown zoning changes, which were adopted in 2009. The downtown design guideline task force had also been reconstituted by the city council to make recommendations on the design guideline review process.

Detter indicated that the CAC was disappointed that the design guideline review task force had not yet met. However during July and August a consulting firm, ENP & Associates, led by Erin Perdu, had conducted a series of events, community coffees, workshops, and online surveys of residents, businesses, and employees of downtown businesses. The discussion at those events focused on what’s working and isn’t working with respect to the current downtown zoning. Detter indicated that the consultant had released a summary of some of those findings.

At the previous night’s meeting of the CAC, those preliminary findings had been reviewed, Detter reported. Not surprisingly, he said, a set of private interviews with developers and downtown real estate professionals – as well as two unnamed members of the DDA board – thought that the current zoning regulations were meeting their intent of developing more density downtown. That group had felt that there were still too many limitations on downtown development. At larger public focus group meetings and workshops, Detter continued, people had largely agreed that the north side of Huron Street between Division Street and South State, the south side of William between Main and Fourth, and the Ann Street site adjacent to city hall should be rezoned. Possible zoning for those sites, he said, would include D2 or possibly a newly-defined D3 zoning. Most people felt that near downtown neighborhoods needed to be protected through proper zoning, Detter reported.

There was also general agreement, Detter said, that the current application of residential premiums [greater floor area ratios allowed for residential uses] was not generating the right kind of diverse housing mix. Premiums were encouraging too much student housing and not enough affordable housing, he said. Most people also supported the idea that the design guidelines should be followed in order to qualify for eligibility for any of the premiums that could be granted. Across the board, most people in all phases of the public process, including online surveys, agreed that more diverse housing should be encouraged in the downtown area, Detter said.

Members of the citizens advisory council were very encouraged by the planning commission’s inclusion of mandatory adherence to city design guidelines as a condition for any request for proposals (RFPs) for the future sale and development of the former YMCA site at Fifth and William. Detter noted that ENP & Associates has now scheduled a series of coffee hours, bag lunches, and public focus groups over the next two weeks as part of the continued work on the downtown zoning review.

Present: Russ Collins, John Hieftje, Joan Lowenstein, John Mouat, Rishi Narayan, Sandi Smith, John Splitt.

Absent: Bob Guenzel, Roger Hewitt, Keith Orr.

Next board meeting: Noon on Wednesday, Oct. 2, 2013, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date.]

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Ann Arbor DDA TIF revenue projections. The vertical line indicates the year when the clarified calculations would be implemented. The red line is the amount of TIF revenue assumed by the DDA in its FY 2014 and FY 2015 budgets, and in its 10-year planning document. The blue line is the estimated TIF revenue under the proposed clarified ordinance calculations. The yellow line is the estimated TIF revenue that the DDA would receive if the DDA continued to interpret the city’s ordinance in its own way. (Numbers from the city of Ann Arbor and DDA. Chart by The Chronicle.)

A joint council-DDA committee was appointed on July 1, 2013 with a charge to begin meeting immediately to work out a recommendation on possible legislation that would clarify the ordinance. However, that committee did not convene until eight weeks later, on Aug. 26. The committee met on just that one occasion before the Sept. 3 council meeting. The postponement until Sept. 3 had come at the council’s May 6, 2013 meeting.

The council had given initial approval of an ordinance change at its April 1, 2013 meeting. The change would clarify the existing language in the ordinance – which outlines how the DDA is supposed to return excess TIF revenue to other taxing jurisdictions – to the extent that the revenue exceeds projections in the DDA’s TIF plan.

Until two years ago, the existing limitation expressed in the ordinance had never been applied. But in May 2011, the city treasurer called the issue to the DDA’s attention, characterizing it as a roughly $2 million issue, dating back to 2003. However, when the DDA retroactively calculated its revenue, as well as rebates to other taxing jurisdictions, it applied a methodology chosen to minimize the amount of “rebate” owed to other taxing jurisdictions, reducing the amount to roughly $1.1 million.

When challenged on its method of calculation, the DDA subsequently changed its position, claiming that the money it had already paid back to other taxing jurisdictions was a mistake. The DDA’s new position was to claim an interpretation of a clause in Chapter 7 as providing an override to limits on TIF revenue – if the DDA has debt obligations, which it does. So in 2012 and 2013, the DDA did not return any of its TIF capture to other taxing authorities. In addition to the city, those taxing authorities are the Ann Arbor District Library, Washtenaw County, and Washtenaw Community College.

The proposal as approved at first reading by the council on April 1, 2013 would essentially enforce the language that is already in the ordinance, but disallow the DDA’s interpretation of the “debt override” clause. Compared to the DDA’s own 10-year planning document, revenue to the DDA under the ordinance change would be roughly similar. The minimal impact compared to the planning document depends on the enactment of the ordinance to apply beginning with fiscal year 2015. However, the 10-year planning document in question did not include a large amount of new construction in the downtown area, which has already generated higher TIF revenue than estimated in the 10-year plan.

The ordinance revision as approved at first reading also includes term limits for DDA board members, and would make the appointment of the mayor to the board of the DDA contingent on a majority vote of the council. Without majority support, the mayor’s spot on the board would go to the city administrator.

Serving on the joint council-DDA committee for the council are: Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Sally Petersen (Ward 2) and Jane Lumm (Ward 2). Representing the DDA are Sandi Smith, Joan Lowenstein, Bob Guenzel, and Roger Hewitt.

The Aug. 26 committee meeting was dominated by political squabbling. The only substantive concept that was batted around briefly at that meeting was the idea of defining some kind of fixed cap on TIF revenue. This approach would replace the existing ordinance language, which calibrates the DDA’s TIF capture with projections in the TIF plan. But the discussion never went as far as to include dollar amounts for the fixed cap.

Deliberations at the Sept. 3 council meeting were relatively scant, consisting primarily of the date to which the item would be postponed.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

Sandi Smith was elected by her colleagues as chair of the Ann Arbor Downtown Development Authority board at its July 3, 2013 annual meeting. Here she’s showing the DDA’s new website on her tablet. (Photos by the writer.)

The board also approved a $59,200 grant to support the formation of a business improvement zone in the South University area. A “trolley” for the upcoming art fairs also received $10,000 worth of support, in action taken by the board.

The capital projects included $50,000 for repair of sidewalk-related amenities that aren’t covered by the city’s sidewalk millage. In addition, the board allocated $200,000 for a streetscape framework planning project. Board action also included $300,000 for the replacement of light poles on Main Street.

The light pole replacement is one source of current friction between the city and the DDA – as the expectation of the city had been that the entire $516,000 project would be paid for by the DDA. But the result of wrangling over the DDA’s FY 2014 budget – given approval by the council on May 20 – was a transfer of $300,000 from the DDA’s TIF fund to the DDA’s housing fund. So the DDA’s position is that it can’t fund the entire light pole replacement project, because of that transfer to the housing fund.

The light pole question is related to the general issue of DDA finances and the revenue it receives through tax increment finance (TIF) capture of taxes – from entities that levy those taxes in the DDA district. Elected as chair at the annual meeting – which immediately followed the board’s monthly meeting – Sandi Smith will face the resolution of the TIF revenue issue as one of her first challenges.

The outstanding issue concerns the way that the DDA administers Chapter 7 of the city code of Ann Arbor – which regulates the DDA’s TIF capture. This spring the Ann Arbor city council gave initial approval to a revision to Chapter 7. The council’s action, if given final approval, would prevent the DDA from giving the code an interpretation that doesn’t recognize a cap on TIF revenue that is expressed in Chapter 7. The amendment to the ordinance would return several hundred thousand dollars a year to other taxing authorities from which the DDA captures taxes. Those entities include the Ann Arbor District Library, Washtenaw Community College, Washtenaw County and the city of Ann Arbor.

The council has postponed final action on the matter until Sept. 3, 2013. Between now and then, the council’s expectation is that a joint DDA-council committee will meet and make recommendations on the Chapter 7 issue.

At its July 1 meeting, the city council appointed four members to its committee: Christopher Taylor (Ward 3), Stephen Kunselman (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). And at the July 3 monthly meeting, outgoing DDA board chair Leah Gunn appointed the DDA’s committee: Bob Guenzel, Roger Hewitt, Joan Lowenstein and Sandi Smith.

Another point of recent budgetary friction between the city and the DDA was raised briefly at the July 3 board meeting. In a formal resolution, the city council had encouraged the DDA to allocate money to fund downtown beat patrol police officers. For its part, the DDA has for a few years already been mulling the question of some kind of additional security – either in the form of ambassadors, community standards officers or police officers. At the July 3 meeting, DDA board members indicated they would continue to mull that range of options, but seemed disinclined to commit to funding police officers.

The board also heard a range of routine reports on July 3, including the monthly parking revenue report. The DDA manages the city’s public parking system under a contract with the city of Ann Arbor. In the future, it was announced, the report will be delivered only on a quarterly basis. Also related to parking policy, a tentative pilot project was announced that could change the basic approach the DDA takes to selling monthly parking permits. The idea would be to assign permit eligibility only to property owners in a defined geographic area. The number of permits would depend on the number of square feet of property – independent of uses such as office, residential, retail, etc. Currently, the DDA uses a first-come-first-served system for individuals, with a waiting list.

The DDA’s monthly meeting marked a transition on the board, as two board members were bid farewell. Newcombe Clark served one four-year term. He’s making an employment-related move to Chicago. Leah Gunn concluded nearly 22 years of service on the board. She finished out her time on the board as chair.

South University Area BIZ

The DDA board was asked to approve a $59,200 grant to support the establishment of a business improvement zone (BIZ) for the South University area of downtown. The money would be allocated only at specific milestone points.

A BIZ is a self-assessment district that can be established under Public Act 120 of 1961 by agreement of a sufficient number of property owners in the district – to generate funds to pay for additional services not provided by the city. If it’s established, the South University Area BIZ would be the second such district in downtown Ann Arbor. In 2010, a BIZ district was established for a three-block stretch of Main Street, between William and Huron streets – to provide sidewalk snow clearing, litter pickup and poster removal. [See Chronicle coverage from 2009: "Ann Arbor Main Street BIZ Clears Hurdle."]

The Ann Arbor DDA provided a grant to assist with the formation of the Main Street BIZ, voting on April 1, 2009 to award $83,270 to defray various costs associated with the formation of the BIZ. Those costs included accounting, auditing, operations and legal services.

At that time, DDA board members reflected on the fact that they did not necessarily want to be signaling – through their support of the Main Street BIZ – that the DDA would be inclined to support all other subsequent efforts to establish business improvement zones in other areas of the downtown. Partly to address that concern, the board asked that the Main Street BIZ produce a “blueprint” for the formation of a BIZ, which could be used by other groups to help navigate the lengthy required process.

At a May 29, 2013 meeting of the DDA’s operations committee, South University Area Association executive director Maggie Ladd and consultant Betsy Jackson pitched the grant to the committee. Jackson, president of The Urban Agenda Inc., told the committee that while the blueprint was a useful fill-in-the-blank document, it was important to have someone with sufficient expertise to fill in those blanks. Jackson was also the consultant hired for the Main Street BIZ.

According to the DDA board resolution, South University property owners are contributing a total of $25,000 toward the start-up costs.

South University Area BIZ: Board Deliberations

Joan Lowenstein introduced the resolution on the South University Area BIZ. Lowenstein reported that South University Area Association executive director Maggie Ladd had spoken to the partnerships committee about the grant. Lowenstein noted that something similar was already in place for an area along Main Street. In the South University area, Lowenstein said, there’s increased commercial activity, and along with that there was increased use of the sidewalks. It would be useful to take a more uniform approach to issues like cleanliness, visitor comfort, and snow removal. The initial support for the South University Area BIZ, Lowenstein said, was shown by the willingness of property owners to contribute $25,000 to the administrative start-up costs.

Lowenstein noted that one of the deliverables from the DDA’s funding of the administrative start-up costs for the Main Street BIZ was a template for creating additional business improvement zones. She reported that such a template had been created, but that creating a BIZ is not just a matter of filling in the blanks. The template or blueprint would save some legal costs – but there’s a log of legwork involved, she said. For example, the exact method of the assessment has to be calculated and its impact weighed. [For example, an assessment could be done based on lineal feet of street frontage or by square feet of property, which would give different burdens to property owners and possibly affect the willingness of a property owner to vote yes.]

Keith Orr indicated his willingness to support the resolution because a BIZ can do things that a DDA can’t do.

Russ Collins stressed that the DDA was responding to requests from businesses in the area, and that it was not a proposal about development. Businesses in the area decided they wanted additional services to make their area more appealing. Sometimes, Collin said, the general public feels the DDA’s primary purpose is to promote new building in the downtown – when the DDA doesn’t actually do much of that. But the DDA does try to support local businesses when they request support to fulfill a mission that fits with the DDA’s mission. And he felt the grant fits that dynamic.

Newcombe Clark wanted to know if there was definitely going to be a South University Area BIZ “at the end of this” or if the DDA’s grant would just support a study. Orr indicated that it’s unknown whether a BIZ would actually be established, but he said, “one hopes there’s a BIZ at the end.” It’s not a study to see if the property owners want it or not. But because it adds a new tax, the people who would be taxed have to vote on the proposal, Orr pointed out. And there are a number of milestones along the way that have to be completed, he noted. Lowenstein explained that there’s an initial vote, and if the proposal didn’t manage to get approval on the initial vote, then the DDA’s contribution would be minimal. After that initial vote, there’s additional administrative work that needs to be done.

Newcombe Clark.

Clark indicated that his recollection was that when the organizers of the Main Street BIZ had approached the DDA, they had “enough ducks in a row” that they’d been able to say: Give us this money and there will be a BIZ at the end of this. Orr responded to Clark by saying that for the Main Street BIZ, the outcome had been unknown. Orr noted that you’d have to canvass to find out who the actual property owners are, which is not always obvious. Clark responded to Orr by saying, “In South U. it’s pretty easy to get 60% [the threshold for BIZ votes of approval] … Two or three people. That’s not a $90,000 project.” Clark said that as long as there are milestones for the DDA’s payments, he was inclined to support it. “If we’re out five grand for a vote,” he said, that would be fine, but he didn’t want to “be out 90 grand to look up numbers that are in my cell phone.”

In response to Clark’s concern, Sandi Smith noted that a “whereas” clause provided for disbursement of funds at key milestone points. She ventured that the language could be modified to say “up to $59,200″ so that if the process stalls along the way, the DDA would stall on its disbursement of funds. That language was added.

Outcome: The board voted unanimously to approve the $59,200 grant to help establish a BIZ for the South University area.

Art

Art came up in several ways, in addition to the board’s resolution on funding for an art fair “trolley.”

Art: Art Fair Trolley

The board was asked to provide $10,000 worth of support for a “trolley” to operate during the upcoming art fairs. The shuttle service for the Ann Arbor art fairs – which take place from July 17-20, 2013 – would circulate to the four different fair areas. [.pdf of the "trolley" route]

The Ann Arbor Convention and Visitors Bureau is also contributing $10,000. The DDA board resolution described the annual operating cost of the art fair trolley as more than $25,000.

Art: Art Fair Trolley – Public Commentary

Max Clayton introduced herself as the executive director of the Guild of Artists and Artisans, but she was speaking on behalf of all four art fairs that make up the Ann Arbor art fairs. She characterized the art fairs as an economic driver, which had been its original mission. They had succeeded at that mission, she continued, for more than 50 years. The art fairs bring about $78 million of economic impact to the community each year, she said. But that $78 million is not revenue to the art fairs, she stressed. That’s money being spent by fairgoers, to shop in stores, eat in restaurants, park in lots and structures, and enjoy a hotel stay.

She described how the art fairs in the last few years are starting to face increased competition from fairs in other parts of the country. Ann Arbor’s art fairs can compete based on the quality of the artists and the art in the fairs, she said. A survey had been done of fairgoers to discover what they need and what they enjoy – to keep them coming back. What they’d heard from fairgoers was the importance of understanding where they were. They’d heard that the fair is too big and people don’t know how to get around. It was determined that fairgoers need to be helped to understand how to navigate the fairs better – so that the event could be enjoyed to its fullest.

So the organizers of the art fairs had decided to pay for an art fair trolley, which follows a route encircling all of the art fairs. The shuttle stops for the art fair trolley are the same as the stops for the shuttle service operated by the AAATA, she said. It costs about $25,000 a year. She pointed out that the Ann Arbor Convention and Visitors Bureau had also contributed $10,000 to the effort. The support of the DDA would be recognized in various ways, including signage placed on the trolley, she said. The vehicle also has a wonderful trolley bell, she noted.

Art: Art Fair Trolley – Board Deliberations

Roger Hewitt introduced the item by saying that other organizations were also involved in supporting the trolley – the Ann Arbor Convention and Visitors Bureau as well as the Ann Arbor Area Transportation Authority.

Outcome: Without further discussion, the board unanimously approved the $10,000 grant for the art fair trolley.

Art: East Stadium Bridges Public Art

During the public commentary segment at the start of the meeting, John Kotarski introduced himself as a member of the Ann Arbor public art commission. He updated the board on the status of the East Stadium bridges art project. He pointed board members to the art commission’s website, where they could view a 45-minute presentation on the four artist proposals for the site. He addressed two questions: Why had the East Stadium bridges location been chosen? And what had been done to include local artists?

East Stadium Boulevard as well as South State Street form a gateway into the city, Kotarski said. At the direction of the city, the public art commission had reached out to stakeholders in that general area. The money that has been allocated for the project originated with the Percent for Art program, he pointed out. And that means that the money has to be connected thematically to the funds of origin. The idea was to create a sense of place and to unify East Stadium Boulevard and South State Street, and to encourage multimodal transportation.

Ann Arbor public art commissioners Bob Miller (standing) and John Kotarski at the July 3 DDA board meeting.

Addressing the idea of local artists, he said it was the desire of the public art commission to involve local artists. But the fact of the matter is, he explained, it’s not possible to have an exclusive competition for local artists – because the city attorney has said that would be illegal. So what the public art commission has done to encourage local artists, he continued, is to do extensive outreach. He named four organizations – the Ann Arbor Art Center, the Street Art Fair, the Arts Alliance, and the Ann Arbor Women Artists – along with 45 other organizations that had been encouraged to be engaged and to submit proposals. There had been 32 submissions for this project. Of those, 10 were Michigan artists and four were Ann Arbor residents. Those 32 have been winnowed down to four.

Kotarski encouraged DDA board members to check out the proposals and to take the survey. Their feedback, he said, is important and invaluable to the public art commission. He and art commission chair Bob Miller – who accompanied Kotarski at the DDA board meeting – have been presenting the information to various groups, including the park advisory commission, the Arts Alliance, and a Ward 2 public forum. The following week they’d be appearing before the planning commission, at its July 9 working session. The public art commission really wants the community to understand what the four proposals are, he said.

You don’t always hit home runs, Kotarski cautioned, though you hope for that. But he did feel there was one proposal of the four that would work very well. So he again encouraged board members to investigate the four proposals and to take the survey.

Art: Public Commentary

Ray Detter reported out from the downtown area citizens advisory council. He said that Marsha Chamberlin, from the public art commission, had filled in the CAC on projects currently in progress. Detter said that Chamberlin had reported that the city had approved the hiring of a full-time city administrator. [The conclusion of a city council committee on public art, which made recommendations that led to the elimination of the Percent for Art funding mechanism at the council's June 3, 2013 meeting, stated: "A full-time art administrator is preferable." Chronicle inquiries about the possibility that the city has moved forward with a decision to hire a full-time administrator have not yet been answered, because of the holiday break.

[Added Monday, July 8 at 8:45 a.m.: Responding to an emailed Chronicle inquiry, public services area administrator Craig Hupy indicated no decision has been made about how to implement the recommendation for a full-time administrator. There are, he wrote, "a couple of ways to deliver that desire: a FTE as a city employee, a contract employee or a contract for services. Each option has its advantages and disadvantages." Before a "vehicle" for providing that full-time effort can be determined, the scope of needs and desires must be drafted, he indicated. "Whatever is recommended will likely have to go to city council for approval," Hupy wrote.]

Pedestrian Issues

Pedestrian issues were the subject of two board resolutions.

First, the board was asked to consider a streetscape framework plan for downtown Ann Arbor at a cost of $200,000 over the next two years. The resolution allocating the funds states that “an enjoyable pedestrian experience is one of downtown’s principal attractions.”

The $200,000 cost would not cover construction. But according to the board’s resolution, it’s a realistic budget to cover “consultants, contingency, and other related costs.” The idea cited in the resolution is to shorten the planning phases and reduce the costs associated with future streetscape projects. The resolution directs the DDA’s operations committee to create a final project budget and timeframe.

The most recent streetscape project completed by the DDA related to improvements on Fifth and Division, which included a lane reduction and bump-outs.

The second agenda item on July 3 that affected the downtown Ann Arbor pedestrian environment was a $50,000 allocation for general sidewalk maintenance. The money would cover displaced bricks, uneven sidewalk flags, and missing, dead or overgrown trees.

Pedestrian Issues: Streetscape Framework

Roger Hewitt introduced the resolution on the streetscape framework plan by saying it had been discussed for several months now. He stressed that the DDA was not looking to plunge into a specific streetscape improvement project. But in the past, when the DDA has done streetscape improvements, it has looked at a single street or a few blocks of a street and decided what it might look like. Now, it would be appropriate, Hewitt said, to take a step back and look at how all downtown streets are used by cars and pedestrians. The idea was not to identify materials or locations of where every lamppost or sign or bench should go. The idea, he said, was to determine “what sort of streets those should be.”

For example, Hewitt said: Should parking be made available on a street? Should the sidewalks be wider or narrower? Where should loading zones go? Where should taxi stands go? The idea would be to identify four or five different types of streets and which streets should be in each category. The DDA would coordinate with the city staff, as well as the University of Michigan and the Ann Arbor Area Transportation Authority on the project. The project would provide a blueprint for where streetscapes should go in the future, Hewitt said – and provide guidelines for what a particular improvement on a particular street should look like. The proposed budget of $200,000 would be spent over the next two fiscal years, Hewitt said. The major cost would be the cost of the consultant, Hewitt concluded.

Sandi Smith said she hoped that the streetscape framework planning process wouldn’t preclude acting on opportunities that might arise in the shorter term. As an example, she gave the 618 S. Main project, noting that part of the brownfield grant would pay for streetscape improvements. John Splitt ventured that the 618 S. Main improvements would be done in the summer of 2014, so he assumed that the framework planning wouldn’t stand in the way. Keith Orr stressed that the framework planning was not a design guideline project, but would address issues like: On this type of street, what should signage look like? Which signs should be together? How far should one parking meter be from another parking meter? Russ Collins jokingly added to Orr’s questions: Should trees be removed that block beautiful theater marquees? [Collins is executive director of the Michigan Theater.]

Smith returned to her point that she wanted to make sure the DDA remained nimble enough to be responsive when needed. Newcombe Clark responded to Smith by saying: “We never stop dancing.” Hewitt ventured that the DDA had learned how to be nimble.

Outcome: The DDA board unanimously approved the $200,000 for a streetscape planning framework.

Pedestrian Issues: Sidewalks

DDA executive director Susan Pollay described the needed work on sidewalks as issues that had been identified during two walk-throughs of the downtown. While there’s a city sidewalk millage that can address slabs of concrete that show significant deterioration, it doesn’t cover issues like the following: bricks that are coming loose, tree pits, and pruning of trees. Those are details that add up to a walkable downtown, she said. She told board members that the money is in the approved budget.

Outcome: Without discussion, the board unanimously approved the $50,000 for sidewalk repairs.

Main Street Light Poles

The board was asked to approve a resolution allocating $300,000 for the replacement of decorative light poles on Main Street. The total estimated cost of the project is $516,000 for 81 light poles.

Downtown Ann Arbor Main Street light pole on the northeast corner of Main & William. This photograph is from the city of Ann Arbor staff, taken in April 2012.

Based on the DDA board’s resolution, it’s the DDA’s expectation that the city of Ann Arbor will make up the difference of $216,000.

Responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced.

The DDA’s resolution indicates that the city of Ann Arbor’s budget approval process this year had determined that the city would allocate $216,000 for the project. What the Ann Arbor city council actually did on May 20, 2013 was to alter the DDA’s budget by recognizing additional TIF revenues of more than $568,000, and shifting $300,000 of that revenue from the DDA’s TIF fund to the DDA’s housing fund.

The council’s resolution also recommended that the DDA spend $300,000 of its TIF fund on the Main Street light pole replacement. In response to an emailed query from The Chronicle, city administrator Steve Powers indicated that the city council will be asked to act on the matter either at its July 15 or Aug. 8 meeting. Public services area administrator Craig Hupy, responding to the same query, explained that it wasn’t yet clear if the council action would include an additional appropriation, or if it could be handled within the existing budget.

Main Street Light Poles: Public Comment

Reporting out from the downtown area citizens advisory council, Ray Detter indicated support for the DDA’s resolution. Combining city and DDA funds makes good sense, he said, and the light pole replacement provides an opportunity to do that. He indicated there could be an opportunity to use public art funds for that project.

Main Street Light Poles: Board Deliberations

DDA executive director Susan Pollay introduced the item by saying that there had been a problem “quietly brewing” on Main Street. One of the first installations of pedestrian-scale lighting in the DDA district, she said, was along Main Street between Huron and William. On the inside they’re rusting, she explained, because water has intruded. Last year, she said, four of them blew over in a storm. [In response to an emailed query from The Chronicle, city of Ann Arbor staff stated that two light poles had fallen down in the spring of 2012. After inspection of all the poles, it was determined that two additional poles were at immediate risk of falling and were also replaced.]

According to Pollay, the city staff have been trying to find a way to pay for the replacement. As part of the city council’s budgeting process, Pollay said, the DDA was supposed to provide $300,000 for the project. If the board approved the resolution, then Pollay would communicate to the city staff, so that a resolution could be prepared for the city council, and the council would need to approve the remaining amount. Newcombe Clark drew out the fact that the money would be drawn from the DDA’s TIF fund. He asked that the point be added to the resolution.

Pollay described how the replacement would need to be coordinated with banner replacement and holiday light plug-ins.

Outcome: The board unanimously approved the $300,000 grant to the city of Ann Arbor for replacement of the light poles on Main Street.

City Council, DDA Relations

The light pole question is actually related to the general issue of DDA finances and the revenue it receives through tax increment finance (TIF) capture of taxes – from entities that levy those taxes in the DDA district. Elected as chair at the annual meeting – which immediately followed the board’s monthly meeting – Sandi Smith will face the resolution of the TIF revenue issue as one of her first challenges.

City Council, DDA Relations: Background

An effort led by Ann Arbor city councilmember Stephen Kunselman (Ward 3) – which has taken different forms over the last year and a half – culminated earlier this spring in initial approval by the council of a revision to Chapter 7, which regulates the DDA’s TIF capture. The council’s action, if given final approval, would prevent the DDA from giving the city code an interpretation that doesn’t recognize a cap on TIF revenue expressed in Chapter 7. The amendment to the ordinance would return several hundred thousand dollars a year to the other taxing authorities from which the DDA captures taxes. Those entities include the Ann Arbor District Library, Washtenaw Community College, Washtenaw County and the city of Ann Arbor.

City Council, DDA Relations: Committee Not “Mutually Beneficial”

The council has postponed final action on the matter until Sept. 3, 2013. Between now and then, the council’s expectation is that a joint DDA-council committee will meet and make recommendations on the Chapter 7 issue.

Board chair Leah Gunn. One of her last acts as chair was to appoint members to the DDA-council joint committee.

At its July 1 meeting, the city council appointed four members to its committee: Christopher Taylor (Ward 3), Stephen Kunselman (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2).

In her remarks on the appointment of the DDA members to the committee, board chair Leah Gunn indicated that the understanding going into the city council meeting was that there would be three members. But the council had appointed four members. [During the council's July 1, 2013 meeting, Marcia Higgins (Ward 4) had proposed that Jane Lumm (Ward 2) be added to the list.]

The four DDA board members appointed to the committee by Gunn are: Bob Guenzel, Roger Hewitt, Joan Lowenstein and Sandi Smith.

Newcombe Clark asked if it had to be called the “mutually beneficial” committee. He referred to the fact that history is “unfortunately … annotated and tagged with these names.”

At the council’s July 1 meeting, the council had also eschewed the label of “mutually beneficial” for the name of the committee – at the suggestion of Stephen Kunselman (Ward 3). Sabra Briere (Ward 1) was sitting in the audience of the July 3 DDA meeting and waved to board chair Leah Gunn, who then invited Briere to the podium to explain. Briere told the DDA board that the council had settled on the idea of calling it a joint DDA-council committee. The DDA board appear amendable to that as well.

City Council, DDA Relations: More Background

By way of background on the reluctance on the part of some to call the group a “mutually beneficial committee,” that phrase in connection with the sorting out of issues between the city of Ann Arbor and the Ann Arbor DDA is not new.

The phrase was first mooted in a Jan. 20, 2009 council resolution. The main issue at that time was the contract under which the DDA administers the city’s public parking system. Subsequently, “mutually beneficial” committees for both entities were appointed, but they did not achieve any results. The following year, new committees were appointed and those committees met over the course of several months, culminating in a new parking agreement ratified in May 2011.

The council formally disbanded its “mutually beneficial” committee at the end of 2011.

City Council, DDA Relations: Housing, Light Poles

Pending the resolution of the Chapter 7 TIF issue, the city council had already altered the DDA’s FY 2014 budget in action taken at its May 20, 2013 meeting. The council’s resolution modifying the DDA’s budget involved housing and the Main Street light poles.

Touching implicitly on the housing issue at the July 3 DDA board meeting, Sandi Smith reported out from the recent meeting of the partnerships committee. The committee had received an update from representatives of various affordable housing advocates – Ann Arbor Housing Commission (AAHC) executive director Jennifer Hall, Washtenaw County office of community & economic development director Mary Jo Callan and Washtenaw Housing Alliance executive director Julie Steiner. Smith reported that the three had been given an update on “where the moving parts fit together” and about ongoing funding reductions at the federal and state levels. The partnerships committee learned about the places the DDA can “plug in,” Smith said, and had agreed to continue to learn and talk to representatives of the affordable housing community.

By way of additional background, one place that housing advocates hope the DDA “plugs in” is with $300,000 of support for an initiative the AAHC is undertaking, which would convert the city’s public housing stock to project-based vouchers. The effort includes a requirement that significant renovations be made to many of the properties. The hope is that the DDA would provide $300,000 of support for a package of renovations that includes AAHC properties within 1/4 mile of the DDA district boundary. That’s the area the DDA currently uses as a policy guideline for allocating expenditures from its housing fund.

The $300,000 figure is significant, because it’s the amount the city council transferred from the DDA’s TIF fund to the DDA’s housing fund, in a budget action taken on at the council’s May 20, 2013 meeting. The DDA’s position is that it can’t fund the entire light pole replacement project – because of that transfer to the housing fund.

City Council, DDA Relations: Downtown Beat Cops

Reporting out from the DDA’s operations committee, Roger Hewitt noted that the city council had passed a resolution requesting that the DDA consider providing funding for police officers. [That resolution was passed at the council's June 3, 2013 meeting. At the DDA board's June 5, 2013 meeting, board chair Leah Gunn had referred the matter to the operations committee.]

Hewitt said the committee had a discussion about the matter of funding downtown police. There are a number of ways to approach it: with ambassadors, community standards officers, or police officers. Hewitt said the DDA would take a reasoned approach to determine what fits best.

Sandi Smith expressed a reluctance for the DDA to pay for an ongoing city operational expense. She felt, however, that it would be great to fund a start-up program to cover equipment needs – like uniforms. A light-hearted exchange unfolded based on the idea of Robocop as a depreciable asset.

Parking

The Ann Arbor Downtown Development Authority manages the city’s public parking system under a contract with the city of Ann Arbor. A report on monthly parking activity is a typical part of all board meeting reports.

Parking: Monthly Report

Roger Hewitt gave the monthly parking revenue update. [A recent Chronicle column includes the breakdown of the DDA parking numbers for nearly the last four years.]

Hewitt highlighted the revenues from the new Library Lane structure, which was completed in July of 2012. The structure showed revenues over $100,000 for May 2013. That is far more than projected, Hewitt said, and compares favorably with revenues from the Forest structure, which has been open for 20 years. The Library Lane structure has been accepted by patrons and is being adopted for use more rapidly than any other new structure, Hewitt said.

Hewitt also noted that this month’s report would be the last monthly report, and in the future quarterly reports will be given instead.

Commenting on the rationale for the move to quarterly reports, Newcombe Clark stated that “the painful convenience of data is that you can often torture it to tell you whatever you want it to say.” He’d been more and more concerned about the pressure that the DDA might feel to create policy based on monthly data. It might indicate a trend, but at this point the DDA is not running any kind of statistical analysis that would give any confidence or probability that “anything from the tides of March or the weather or what-have-you” might indicate revenue, he said.

At his self-described “polite and insistent poking,” Clark had proposed to move the reports to a quarterly review, so that the DDA could look at trends with a more objective eye. “The data will, of course, be collected daily as it [currently] is, and will be available for anybody that wants it,” he said. If board members just miss the monthly reports and it leaves a void in the monthly operations committee meeting, Clark quipped, he suspected they would restore the monthly reports. He thought it was a good policy to take a break from looking at data and getting lost in it without understanding it.

Parking: Permit Pilot Program

As part of his report from the operations committee, Roger Hewitt noted that the committee had focused on the high demand for parking in the area of the University of Michigan campus. Illustrating the overall demand was the number of monthly parking permits that had been sold for the new Library Lane structure. Over 600 monthly permits had been sold for Library Lane, Hewitt said, and there’s already a wait list for that new structure.

Hewitt said the operations committee had been discussing how to make the process for issuing permits “less subjective and more objective.” By way of background, the parking permit allocations are currently made on a first-come-first-served policy with a waiting list. So decisions about who may purchase them are objective. What could be considered subjective is the number of permits that can be sold for a particular structure. For some structures, the oversell margin seems to be maximized. For others, it is not.

That subjective component can make other DDA decisions also seem subjective – like determining whether monthly permits will be assigned to new developments under the contribution in lieu (CIL) program. That program can allow a new development to satisfy a parking requirement by purchasing monthly permits in the public parking system. Permits purchased through the CIL program are priced at a 20% premium. The DDA can exercise its discretion in determining whether there is capacity in the parking system to grant the permits. Whether there is capacity is the issue that could be subjective.

When the DDA granted 40 CIL permits in the Forest Street structure to the proposed 624 Church Street project – which is in the South University area – at least one owner of an existing residential building complained that this was unfair. That was the owner of the Zaragon building, located adjacent to the 624 Church Street development. Hewitt operates his revive + replenish business on the ground floor of Zaragon.

At the July 3 meeting, Hewitt reported that the operations committee had decided to start a pilot project for the Forest Street structure – to assign permits not based on the first-come-first-served basis as they currently are. Instead, permits would be issued to building owners in the South University area inside the DDA district, based on the square footage of those buildings.

That would provide an objective standard for determining who gets the parking permits instead of assigning them in a subjective manner, he said. It would be a pilot project, Hewitt stressed. No contract would be issued. Each building owner would be contacted and would be offered a chance to purchase permits at the going rate, based on how much square footage they owned. Hewitt indicated that roughly one parking space would be provided for every 2,500 square feet of building area, based on the data the DDA had collected.

Current permit holders would be “grandfathered in,” Hewitt said. He said there are very few examples where there are more permits in a building now than the proposed system would allow. If every building owner took up the DDA’s offer, about 280 permits would be sold for the Forest Street structure, compared against roughly 600 spaces in the structure, Hewitt reported. [However, half of the 600 spaces in the Forest structure are allotted to the University of Michigan. Currently, about 100 permits are sold for Forest.]

Hewitt indicated that at this point, the goal is to measure the level of interest. No one is going to lose their parking space, he stressed. If someone voluntarily decides not to renew their monthly parking permit, then the permit would go into the new system of allocation. Because the South University area is a separate geographic area from the rest of downtown, Hewitt said, it would be a better laboratory to experiment in.

Keith Orr asked about the timeframe for the project and the standards for evaluating success. What does success look like? Orr asked. Hewitt characterized the project at this point as “more informational gathering.” It’s not that the DDA is trying to achieve a specific goal beyond encouraging development in the South University area, Hewitt said. It gives current and future property owners the firm knowledge that: “If I build this many square feet, I’m going to get this number of parking spaces. It takes away a variable and puts in a known number,” Hewitt said.

It’s a question of whether there’s continued economic development and continued job growth, Hewitt said. The pilot project would be evaluated as it goes along, Hewitt said. It’s difficult to know what the reception is going to be and how successful it is. In the South University area, the DDA receives a large number of requests for monthly permits from students or parents of students who don’t live in the DDA district. That was a group that the DDA didn’t need to incentivize, Hewitt said. This proposal would use the parking system to benefit property owners in the area, Hewitt said. It would be up to the property owners to decide how those permits would be divided among their tenants.

Newcombe Clark indicated that he had been concerned about this. “Trying to answer the question of what is fair, is just going to give heartache for everybody,” Clark said. What he hoped would be released is something a bit more detailed – something that defines who the property owners are. With the exception of a limited number of reserved parking passes, the permits provide the ability for regular users of the system to save some money and have consistency with expectations for availability of parking. South University makes sense, Clark said, because of the geographic area – but also because of the contribution in lieu (CIL) approval of 40 parking spaces for the 624 Church Street development.

This approach to permits, Clark said, might allow the DDA to “get ahead of all these reactive pulling-out-of-the sky of who gets what, where, and why.” To him it was a big step to address demand management with monthly parking permits. There are long wait lists at large structures, and he didn’t want to get into the question of whether students or students’ parents deserve those spaces or not. That will be something the DDA continues to wrestle with, but the fact is, Clark stated: There will be more demand than supply. Getting away from the idea of “fairness” to the idea of an “objective standard” is a step forward, Clark said. If everyone hates it or no property owners take up the DDA on the offer, that would be helpful information, he said.

Hewitt wrapped up the conversation by saying that the CIL ordinance had pushed the DDA to address the issue, characterizing the CIL program as requiring the DDA to provide parking if there is room in the system.

Parking: Public Commentary

During public commentary time at the conclusion of the meeting, Alice Liberson indicated that she had no problem with cost and availability of parking in Ann Arbor. She said “it cracks me up” when she hears people say it costs too much and there’s no place to park. That’s because she compares the situation to Boston, where she lived previously. She was critical, however, of the new parking kiosks. She described them as very cumbersome. You have to wait for the screen to come up. And she felt she’s not the only one who’s had to go back and verify the number of the space where she’d parked – which has to be keyed into the kiosk. She’s also had her coins and credit card rejected.

Liberson also contended there’s a mean-spiritedness about the new parking kiosks, because they don’t show you the amount of time that’s still remaining from a previous patron, which makes it difficult to use the leftover time. She also complained about the way the meter bag program is handled. [Meter bags are placed over the meter heads to indicate that motorists are not allowed to park there.]

Board Transition

At the annual meeting, which immediately followed the regular monthly meeting on July 3, Sandi Smith was elected chair of the Ann Arbor Downtown Development Authority board for the current fiscal year, which began July 1.

Newcombe Clark reacts to a modification of his resolution of appreciation to include the phrase ‘”polite and insistent poking.”

Smith’s election as chair followed the board’s custom of electing its vice chair to the position of chair for the next year.

Other board officers elected included John Mouat as vice chair, Keith Orr as secretary, and Roger Hewitt as treasurer. They were all made by separate unanimous votes.

Smith took over the role of chair from Leah Gunn, who’s concluding her service on the board. Gunn’s current term on the DDA board expires on July 31 this year.

At the board’s July 3 meeting, the board bid farewell to Gunn and Newcombe Clark, whose term is also expiring at the end of July. First appointed in 2009, Clark served one four-year term. He’s making an employment-related move to Chicago.

Gunn served for nearly 22 years on the board starting in 1991.

In 2011 she announced she would not to seek re-election in 2012 to a seat on the Washtenaw County board of commissioners. She had first been elected as a county commissioner in 1996. After redistricting of the county board seats, she decided to support fellow Democrat Yousef Rabhi, who was re-elected and now serves as chair of the Washtenaw County board. In her professional life Gunn served as a librarian in the University of Michigan graduate and law libraries.

Bob Guenzel led the standing ovation given to Leah Gunn on concluding her DDA board service.

The second term for Russ Collins is set to expire on July 31, along with those of Gunn and Clark. However, Collins was nominated at the city council’s July 1 meeting by mayor John Hieftje for reappointment to the DDA board.

Resolutions of appreciation were read aloud by DDA executive director Susan Pollay for outgoing board members Clark and Gunn.

Clark took some good-natured ribbing from his board colleagues as Smith picked up on a phrase he’d used earlier in the meeting to describe his own behavior: “polite and insistent poking.” The phrase was incorporated into his resolution.

For her part, Gunn picked up on her resolution’s mention of her previous turn as chair of the board – in 1995-96. She took the opportunity to note that during that period Pollay had been hired as executive director, so Gunn wanted to take some credit for Pollay.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: Connector Study

By way of background, the Ann Arbor Area Transportation Authority is currently conducting an alternatives analysis study for the corridor running from US-23 and Plymouth southward along Plymouth to State Street, then further south to I-94. The alternatives analysis phase will result in a preferred choice of transit mode (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops.

A previous study established the feasibility of operating some kind of high-capacity transit in that corridor. A key finding of the feasibility study was that the demand for high-capacity transit is clear in the “core” of the corridor – primarily between the University of Michigan’s north campus, medical facilities and central campus. The demand was found to be less intense on the corridor’s “shoulders.”

In his report out from the operations committee at the DDA’s July 3 meeting, Roger Hewitt said that the connector study had held a public meeting a few weeks ago. It had not been overly well-attended, he allowed. The study is at this point in the process of looking at routes and modes. The option of the elevated guideway system had been eliminated from further consideration – due to cost, and difficulty of putting it through an historic district. It was five times more expensive than the next-most expensive option, he said.

Comm/Comm: DDA Website

Sandi Smith pointed out that the new DDA website is up. She thanked DDA management assistant Jada Hahlbrock for her hard work with Keystone Media to complete that project. Smith said the website includes an interactive map, where visitors can find out where charging stations, bike stations, and parking structures are, with details about each facility, including current vacancy rates. Vacancy rates are not all “hooked up” yet, she said, but that functionality is in progress.

Comm/Comm: Development, Planning

Issues of future downtown planning came up during public commentary at the start of the July 3 meeting and during Ray Detter’s report out from the downtown area citizens advisory council.

Alice Liberson introduced herself as a resident of Burns Park who owns a business on Fourth Avenue [Dogma Catmantoo]. She’d never attended a DDA board meeting, she said, but she’d just been reading an article in the media that she wanted to comment on. Whatever is going on in the South University area took her by surprise, she said. Some people want to make a high-density downtown – a regular, “grownup downtown.” Many times, she said, things happen under the radar and then all of a sudden it’s a fait accompli. What’s wrong with one- and two-story buildings? she wondered. Whatever you do, you’re not going to bring grownups to that South University area, she said.

She indicated skepticism that building high-density, fancy buildings would encourage specific demographics to move. The city can’t control who’s going to live where, and she didn’t think it should try. She suggested that there’s a great opportunity to establish a pedestrian, no-car zone. There are no such zones in Ann Arbor, she noted. She contended that most charming small towns have a car-free zone, where you can sit outside and enjoy a meal and not inhale car fumes. In such a car-free zone, people move slowly, and they wind up patronizing retail stores. She concluded her remarks by saying she hoped she didn’t sound strident, quipping that she has “tone issues.”

At the conclusion of the meeting, Liberson clarified that she was not against development.

Reporting out from the downtown area citizens advisory council, Ray Detter updated the DDA board on the re-establishment of the R4C citizens advisory committee. He also updated the board on the D1/D2 zoning review process that the city council, on April 1, 2013, had directed the planning commission to undertake. Detter reported that the planning commission’s executive committee had met the previous day to begin interviews to hire a consultant to help with that process. Two large public meetings would be held, Detter reported, in addition to several smaller meetings – with the goal to report back to the city council by the end of September.

Detter also noted that a design review task force had been established [through council action on March 4, 2013] to review the downtown design guidelines. The first of four scheduled meetings would take place on July 24 from 4:30-6 p.m. in the ground floor south conference room at city hall. Detter hoped that public input would be allowed at the meetings. He called for “more teeth” for the design guidelines. There are ways to give them more teeth, Detter contended.

The developer of the 413 E. Huron project, Detter contended, had “scoffed” at the recommendations of the design review board. Detter mentioned two projects that would be coming forward located in the D1 zoning area: at 121 E. Liberty and 210 S. Fourth. The public participation meetings for those projects would be taking place on July 10, Detter said. Nothing higher than five stories is proposed, Detter said. The properties are in a historic district, he pointed out.

[The back-to-back meetings for those projects start at 6 p.m. on July 10 at the downtown Ann Arbor District Library, 343 S. Fifth Ave. The first citizen participation forum, from 6-7:10 p.m., is for a proposal by the owners of the Running Fit building at 121 & 123 E. Liberty. They hope to add two stories of apartments to the existing one-story building, as well as a rooftop patio and penthouse occupying a partial fourth floor. The second forum, from 7:10-8:30 p.m., is for a project at the Towne Center – the former Montgomery Ward building at 210-216 S. Fourth Ave. The project would add up to three stories of apartments above portions of an existing two-story building. A new facade is planned for the building.]

Present: Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein,

Absent: Nader Nassif, John Mouat.

Next board meeting: Noon on Wednesday, Sept. 4, 2013, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date.]

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The council will be represented by Christopher Taylor (Ward 3), Sally Petersen (Ward 2),  Stephen Kunselman (Ward 3) and Jane Lumm (Ward 2). Lumm’s name was added to the mix during the council’s meeting.

The current source of friction between the DDA and the city concerns the interpretation of Chapter 7 of the city code, which regulates the DDA’s tax increment finance (TIF) capture. The DDA has chosen to interpret the Chapter 7 language in a way that does not recognize the cap on TIF revenues that is set forth in Chapter 7. That led to a proposal by some councilmembers earlier this year to revise the ordinance so that the DDA’s alternate interpretation is clearly ruled out. The council gave the ordinance change initial approval on April 1, 2013. But later, on May 6, 2013, the council chose to postpone the vote until Sept. 3, the council’s first meeting that month.

In the memo accompanying the council’s July 1 resolution, the group – which was described as a “mutually beneficial” committee – is tasked with coming up with a recommendation for Chapter 7 revised language with a deadline of Sept. 2. During the meeting, the name of the committee was changed from “mutually beneficial” to simply a “joint DDA-council committee.”

The phrase “mutually beneficial” in connection with the sorting out of issues between the city of Ann Arbor and the Ann Arbor DDA was first mooted in a Jan. 20, 2009 resolution. The main issue at that time was the contract under which the DDA administers the city’s public parking system. Subsequently, committees for both organizations were appointed, but they did not achieve any results. The following year, new “mutually beneficial” committees were appointed and those committees met over the course of several months, culminating in a new parking agreement ratified in May 2011. The council formally disbanded its “mutually beneficial” committee at the end of 2011.

Responding to an emailed query from The Chronicle, current DDA board chair Leah Gunn indicated she would wait until the council passed its resolution before making public the names of the DDA board counterparts.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

The council’s action came at its June 3, 2013 meeting, two weeks after the council set its FY 2014 budget – during a May 20, 2013 debate that ultimately rejected funding for three additional police officers. The proposed budget amendment, which failed on a 5-6 vote, had been brought forward by Jane Lumm (Ward 2). The amendment would have reduced the budget of the 15th District Court by $270,000.

The resolution on June 3 was brought forward by Lumm and Sumi Kailasapathy (Ward 1), who both supported the unsuccessful attempt to reduce the 15th District Court budget to fund police. The June 3 resolution came partly in response to the sentiments expressed during the FY 2014 budget debate, when some councilmembers on the prevailing side had said they’d prefer for additional police to be paid for by the DDA.

The DDA itself has designated $300,000 in its parking fund budget for the next year as “discretionary” and has previously discussed allocating that money to a “clean and safe” initiative – which could include funding police officers. However, sentiments on the DDA board have been mixed about the exact nature of the staffing the DDA would like to pay for. Some DDA board members have indicated a preference for hiring staff who would act as “ambassadors” – not police.

The DDA board meets next on June 5, 2013. For a Chronicle op-ed on this general topic, see: “Counting on the DDA to Fund Police?”

Dissenting on the June 3 resolution were Christopher Taylor (Ward 3) and Margie Teall (Ward 4).

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: : [link]

DDA board chair Leah Gunn at the April 3, 2013 board meeting. (Photos by the writer.)

The proposed amendments to Chapter 7 of the city code, given initial approval at the council’s April 1, 2013 meeting, would reduce the DDA’s TIF capture by roughly $931,000 for FY 2014 – compared to the amount the DDA would receive based on the DDA’s current interpretation of the ordinance. But in adopting its two-year budget recently, DDA did not factor in recent building projects in the downtown – which add to the increment on which the DDA can capture taxes, starting in FY 2014.

So compared to the amount of TIF revenue in the DDA’s adopted FY 2014 budget, the clarified calculations would result in only about $363,000 less TIF revenue for the DDA. And compared to the DDA’s adopted FY 2015 budget, the clarified calculations would result in about $74,000 less revenue than budgeted. The clarified calculations would result in TIF revenue to the DDA in FY 2014 and FY 2015 of $3.570 and $3.682 million, respectively.

A dispute on the clarity of the existing Chapter 7 language had emerged in May 2011 just as the DDA and the city were poised to sign a newly renegotiated agreement under which the DDA manages the public parking system. At that time, the city’s financial staff reportedly first noticed the implications of an existing Chapter 7 paragraph that appears to place a cap on the DDA’s TIF capture – a cap that’s calibrated to projections in the DDA’s TIF plan. The TIF cap rises each year based on forecast growth in the DDA’s TIF capture district.

Several board members weighed in on the issue during the April 3 meeting. The idea of any kind of cap – let alone one that’s based on estimates contained in the appendix of the DDA’s TIF plan – was sharply criticized by Joan Lowenstein, who characterized the approach as based on “a fallacy.” She also called the idea of a cap poor public policy. However, both the cap and its basis are already in the existing ordinance language that the city council’s ordinance amendment seeks to clarify.

Roger Hewitt took the board’s meeting as an opportunity to question whether the ordinance amendments actually clarify how the calculations are to be done, contending that he’d come up with different results than the city treasurer, starting from the same ordinance language. He cautioned that the DDA’s financial planning and the DDA’s budget would need to be re-evaluated – allowing for no “sacred cows” – if the council gave final approval to the ordinance changes.

Russ Collins contrasted the amount of net revenue received by the city from the geographic area of the DDA district before the DDA was established back in 1982, compared to today. The net proceeds from taxes and the public parking system (which lost about $250,000 a year during that era) came to about $1.25 million 30 years ago, according to Collins. Today, the city receives nearly $8 million annually – around $4 million in taxes, $3 million in parking revenue, and a grant to the city of roughly $0.5 million a year toward debt on the city’s new Justice Center building.

Bob Guenzel focused his remarks less on the financial side and more on the aspects of the ordinance change that would restrict future board membership. He saw no benefit to the proposed DDA term limits, noting that the city council has an opportunity to end a DDA board member’s service by deciding not to re-appoint someone to the board. John Mouat was critical of the proposed ordinance changes that would prevent elected officials of taxing jurisdictions from serving on the board, saying he’d found the participation of politically-connected people to be beneficial to the board.

The extended remarks by board members on the topic came in the context of a 7-3 vote by the city council on April 1, giving initial approval of the ordinance changes. [Christopher Taylor (Ward 3) was absent from the meeting of the 11-member council.] A second vote, expected at the council’s April 15 meeting, would be required to enact the changes. Based on their remarks made at the council table, two of the seven votes in support of the changes – by Marcia Higgins (Ward 4) and Sabra Briere (Ward 1) – were widely read as likely to change at the second vote. Ordinance changes require a six-vote majority.

In addition to discussion of the possible ordinance changes, the DDA heard its usual range of committee reports, including the monthly parking update. Public commentary related to a possible artificial ice-skating rink atop the Library Lane underground parking garage.

Chapter 7 Ordinance Amendments

On April 1, the Ann Arbor city council gave initial approval to a set of changes to Chapter 7 of the city code, which governs the Ann Arbor Downtown Development Authority.

Chapter 7 Amendments: Background

The revisions considered by the council fell roughly into two categories: (1) those involving board composition and policies; and (2) calculation of tax increment finance (TIF) capture in the DDA district.

In the first category, the revisions to Chapter 7 that were given initial approval by the council included: a new prohibition against non-mayoral elected officials serving on the DDA board except by agreement with the other taxing jurisdictions; term limits on DDA board members; and a new requirement that the DDA submit its annual report to the city in early January.

Another amendment stipulates that if tax increment financing is used as the financing method for an approved authority project, the project must meet one of the DDA’s adopted plan goals. Among those plan goals is support of housing. The amendment provides the ability of the DDA to make investments in properties not strictly in the district, but also in neighborhoods near the district.

More significantly, the council gave initial approval to proposed revisions to Chapter 7 that would clarify how the DDA’s TIF tax capture is calculated. The “increment” in a tax increment finance district refers to the difference between the initial value of a property and the value of a property after development. The Ann Arbor DDA captures the taxes – just on that initial increment – of some other taxing authorities in the district. Those are the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. For FY 2013, the DDA will capture roughly $3.9 million in taxes.

The proposed ordinance revision would clarify existing ordinance language, which includes a paragraph that appears to limit the amount of TIF that can be captured. The limit is defined relative to the projections for the valuation of the increment in the TIF plan, which is a foundational document for the DDA. The result of the clarification to the Chapter 7 language would mean about $363,000 less TIF revenue for the DDA in FY 2014 – compared to the $3.933 million shown in the DDA’s adopted budget for that year. For FY 2015, the gap between the DDA’s budget and the projected TIF revenue – using the proposed clarifying change to Chapter 7 – is just $74,000.

However, the total increment in the district on which TIF is computed would show significant growth. And under the proposed clarification of Chapter 7, that growth would result in a return of TIF money to other taxing jurisdictions – that would otherwise be captured by the DDA – totaling $931,000 each year for FY 2014-15. The city of Ann Arbor’s share of that would be roughly $559,000, of which $335,000 would go into the general fund. The city’s general fund includes the transit millage, so about $69,000 of that would be passed through to the Ann Arbor Transportation Authority.

The amount of TIF capture that’s returned to the other taxing jurisdictions is tied to growth in the valuation by the Chapter 7 language. Under Chapter 7, if the actual rate of growth outpaces the growth rate that’s anticipated in the TIF plan, then at least half the excess amount is supposed to be returned to the other taxing authorities in the DDA district. In 2011, the DDA for the first time returned excess TIF capture to other authorities, when the existence of the Chapter 7 language was reportedly first noticed. At that time, the DDA made repayments of TIF monies to other authorities of around $400,000, which covered what was owed going back to 2003. When the DDA calculated the amounts owed in 2011, the city of Ann Arbor waived its roughly $700,000 share.

In 2011, the DDA used a year-to-year interpretation of the Chapter 7 language instead of computing rate of growth against the base year in a cumulative fashion. That is a point that the Chapter 7 revisions would clarify. At the two previous meetings when the council had considered but postponed voting on the ordinance amendments, that specific point had not been addressed. But the substitute ordinance revision offered on April 1 clarified the current language in favor of the cumulative methodology. Previously, the council had postponed voting at its March 18, 2013 and March 4, 2013 meetings.

The figures below come from the city of Ann Arbor’s financial services staff. Labels are The Chronicle’s.

MOST RECENT PROJECTIONS FOR TIF CAPTURE (in millions)
 FY 13   FY 14  FY 15
========================== 
 3.957   3.933  3.756  DDA Adopted Budget TIF Revenue
 3.957   4.501  4.613  Projected TIF, DDA View 
 3.957   3.570  3.682  Projected TIF, Clarified Ch. 7
          .568   .857  Budgeted vs Projected, DDA View
         (.363) (.074) Budgeted vs Projected, Clarified Ch. 7
==========================

ADDITIONAL REVENUE FROM CLARIFIED CH. 7
 FY 13   FY 14  FY 15
========================== 
          .335   .335  City General Fund
          .223   .223  City Non-General Fund
          .559   .559  Total City

          .372   .372  Total AADL, WCC, WC
          .931   .931  Total

-

These projections do not include the capture that would result in future years from completion of City Apartments, 624 Church, 618 S. Main, or 413 E. Huron (assuming that it is approved).

Chapter 7 Amendments: DDA Director Summary

Susan Pollay, executive director of the Ann Arbor DDA, gave the board an update on the city council’s action on April 1. She reported to the board that a fair number of questions had been asked and answered – via e-mail preceding the meeting and also during the meeting that evening. She characterized the ordinance changes as involving three main points. The first relates to the definition of the DDA’s tax increment finance (TIF) capture – which would reduce the amount received by the DDA by imposing what Pollay called a “permanent cap.” [The cap induced by the ordinance is keyed to the estimates in the TIF plan, which increase each year. That is, the cap Pollay described is not a fixed amount, but rather increases each year.]

Pollay explained that there are some confusions about the interpretation of the current ordinance – saying that if the annual (year-to-year) method is used, that would have some impact but not as dramatic an impact on the TIF capture as the cumulative method. So there have been questions about why that particular interpretation has been used.

The second point Pollay characterized as an elimination of the DDA’s obligation for its bond issuances. She noted that the DDA has responsibility for $67 million worth of projects – including the parking deck component of the City Apartments project, Fifth and Division streetscape improvements, and the Library Lane parking garage project.

Pollay described the ordinance revision as eliminating the language now in the ordinance that relates to bond obligations. She then quoted out the relevant section. She characterized it as a pretty significant policy change, with respect to the DDA’s obligation to its debt service. [The DDA interprets the language to mean that it's entitled to full TIF capture as long as its total debt service requirements exceed the amount of TIF captured. However, on a different interpretation, the language simply means: Of the TIF that is received, first to be paid is debt service, followed by other distributions in support of the development plan for the purpose of the DDA's existence, followed by possible return of surplus TIF to the taxing jurisdictions.]

The final issue, Pollay said, has to do with governance. She observed that there are relatively few boards and commissions that have term limits – and other than the park advisory commission, she wasn’t aware of any. [The greenbelt advisory commission (GAC) also has term limits, a point highlighted at the commission's April 4, 2013 meeting.] The proposed ordinance revisions would impose term limits for the DDA board and would eliminate elected officials from future participation on the board, Pollay said. The ordinance revisions would also potentially allow the mayor to serve on the DDA board, she noted, but that would be on a year-to-year basis.

She summarized the changes by saying that: the TIF capture would be affected pretty dramatically; there would be no further connection between the DDA and debt service for the DDA’s projects; and term limits would be imposed on the board members. She noted that the council had approved the ordinance revisions at first reading, and the second reading would be coming at the council’s April 15 meeting. At that meeting there would be a public hearing as well, Pollay noted.

Chapter 7 Amendments: Board Remarks – Financial

Bob Guenzel asked if the Ann Arbor DDA and the city were clear with “the rest of the world” about how TIF capture is to be calculated. Pollay replied by saying that the DDA had received charts from the city staff. The text of the ordinance itself as put forward, she said, is from her perspective not any more clear. She felt that five years from now if the city or the DDA were to look at it, she’s not sure that it would be clear.

Pollay reported that she and Roger Hewitt had met with city staff for the better part of a week. And using the same language as in the ordinance revision, Hewitt had arrived at different numbers from the city staff. According to the city staff calculations, the revised ordinance would reduce the TIF revenue to the DDA by $931,000 for FY 2014 [compared to the amount the DDA would receive based on its interpretation of the current ordinance language.] Compared to what the DDA has budgeted for FY 2014, the TIF revenue would be $363,000 compared to what the DDA had budgeted. And going forward, there would be a cap, she said.

DDA board member John Mouat. In the background is board member John Splitt.

John Mouat ventured that there are several downtown development authorities in the state, so it might be possible to seek guidance on interpretation based on how other DDAs compute TIF. Pollay noted that each downtown development authority is created by its own community – so it’s not one-size-fits-all. “Our own TIF has been around for quite a while,” Pollay said. She said that the Ann Arbor DDA had been operating under a shared understanding – but now has learned that not everybody in the present agrees with what was done in the past.

Hewitt said that as treasurer, he felt he had a fiduciary responsibility at least to talk about what the impacts of the ordinance changes are. The first thing he found disturbing and disappointing is that in his time on the DDA board, it’s the first time that the council has decided to take action without any prior consultation with the DDA on the impact.

By way of background, the council has actually taken action previously that has affected the DDA budget – without consulting the DDA. In 2007 the council reached into the DDA’s already adopted budget and changed an item on the same night it approved the city’s budget as a whole. From the May 21, 2007 city council minutes [Fund 0003 is the TIF fund]:

[FY 2008 budget] Amendment 11

Resolved, that the Downtown Development Authority fund (0003) expenditure budget be decreased by $1,600,000 to reduce the appropriated reserves for future capital construction projects.

On a voice vote, the Mayor [John Hieftje] declared the motion carried with one dissenting vote made by Councilmember [Joan] Lowenstein.

At the April 4, 2013 meeting, Hewitt continued, calling the council’s action this time “unprecedented,” saying “We have essentially been out of the loop.” It’s difficult to understand exactly what the goal is of the ordinance changes, he contended.

The two things Hewitt found most troubling about the ordinance changes were: (1) the change in the financial basis on which the DDA did its planning; and (2) remaining unclarity in the ordinance, despite the changes.

Hewitt said over the last few years the DDA has undertaken $67 million worth of infrastructure improvements to the downtown. A very detailed financial plan had been put forth, he said, the basis of which he said is in the ordinance – that debt service will be paid off before there was any rebate of TIF back to the taxing authorities. [This is an interpretation of the ordinance language that relies crucially on a specific reading of the phrase "as set forth above." In context, the phrase has an interpretation that is arguably different from the one on which the DDA is relying.] By changing that language, Hewitt contended, the city had changed the financial basis on which the DDA had put that plan forward. He likened the situation to changing the rules after the money was spent.

The second part, he said, is the confusion about how the TIF should actually be calculated – based on the annual method or the cumulative method. Hewitt contended that he had taken the language in the proposed ordinance change and come up with some calculations, and had met with city treasurer Matt Horning and the city’s chief financial officer Tom Crawford. The two city staff members had taken the same language and come up with an entirely different way of calculating it. Russ Collins interjected to confirm that it was the city’s numbers that were presented to the council. Hewitt confirmed that was the case, and said that he was not trying to say who was right and who was wrong. He noted that there is no formula in the revised ordinance language to guide the calculation. If the ordinance is supposed to bring clarity to how that is done, it certainly falls far short of it, Hewitt contended. It’s still open to interpretation, he said.

If the ordinance is enacted, the DDA needs to reevaluate its 10-year budget and its 10-year plan, based on the revised ordinance. But without some clarity about how the calculation is done, Hewitt said, the DDA cannot make projections about how to adjust its long-range plan. Assuming the clarity can be achieved on how the calculations are done, Hewitt said he felt the DDA needs to reevaluate its budgets and its 10-year plan – based on a new reality. He felt that all the commitments in the DDA budget need to be examined. Everything would need to be put on the table. He felt there should be no “sacred cows” about what gets saved and what doesn’t.

What could be a small impact in the first two years could multiply to a larger impact in subsequent years, Hewitt contended. He felt the board’s operations committee needs to sit down and try to achieve some clarity, assuming that the ordinance is approved. And then the committee needs to reevaluate the DDA’s current budget and the 10-year plan, focusing on the DDA’s core mission: Infrastructure improvement to encourage economic development of the downtown. He said the DDA would be remiss in its financial responsibilities if it did not take up that challenge.

Chapter 7 Amendments: Board Remarks – Policy Issues

Joan Lowenstein said she’d noticed some things in watching the city council deliberations the other night. She indicated that she identified with councilmember Sabra Briere with respect to the math part, which is also not Lowenstein’s strong point, Lowenstein said. Then Lowenstein sought to clarify what she was trying to say about Briere – not that math is not Briere’s strong point, but rather that this is what Briere herself had said. The remark drew a laugh from board members. DDA board chair Leah Gunn noted that Briere was in the audience. [Briere did not appear to take any offense at Lowenstein's comments.]

DDA board member Joan Lowenstein. Next to her is board member Keith Orr.

It’s really the public policy part of the question that bears examining, Lowenstein said. She identified two public policy issues.

First, when she previously served on the city council, whenever an ordinance change was being considered, it was considered important to look at it much more strictly than you would if it were simply a resolution. That’s because ordinances are in a sense “written in stone” – or at least the digital equivalent of that, Lowenstein said. So when you’re making an ordinance change, she said, you’d better make awfully sure that this is something you really want to be there for a very long time.

And this ordinance change is based on calculations that nobody agrees on, Lowenstein said. Those calculations stem from the downtown development plan, which has an appendix, and the numbers in that appendix are estimates of what the growth will be in the downtown. So if the estimate for the first year is incorrect, she contended, then all the other estimates are also incorrect. So this ordinance is based on a “fallacy,” she concluded. And the calculations are based on fallacies. And that doesn’t make sense for an ordinance change.

On the second public policy issue, Lowenstein said, she felt that the original ordinance language that puts a kind of cap on the TIF capture was “misguided.” She had researched the history of the formation of the DDA. She contended that the only people who objected to the TIF capture were people who said: We really shouldn’t be taking money out of the schools. It was only the idea of taking school money that really got people stirred up, she contended. “Well, we don’t take school money anymore,” Lowenstein said. So the whole question about the DDA TIF capturing money that could be used for education is moot, she concluded.

As a matter of principle, if you’re looking at investment, whether it’s your own personal investment, or business investment, or in this case the city, Lowenstein continued, you don’t stop the investment at the point when you are doing well. After so much belt-tightening, she said, “we are now getting to the point where we can see that we are really doing well.” So this is not the time to stop investment, she said. The idea of a cap on something that continually increases your economy just doesn’t make sense, she contended.

Aside from all of the arcane mathematical questions about how you calculate things, Lowenstein felt fundamentally it’s a question of whether a cap is good public policy, and it’s clearly not, she contended.

Chapter 7 Amendments: Board Remarks – Positive DDA Impact

Roger Hewitt then offered a personal perspective on the history of downtown Ann Arbor. He has started working downtown shortly after the DDA was formed, he said. He’s been working downtown for nearly 30 years and has owned a business downtown for about 20 years. He felt there’s a tendency to look at the downtown now and think that it wasn’t that different 30 years ago – and that it won’t be that different 30 years from now. Having been here, he said, he could tell you that is simply not true. Thirty years ago the downtown was a rapidly declining retail area. It was in trouble. And it has now evolved into one of the most vibrant downtown areas – with dining and entertainment areas – that you can find in the country, or certainly in the Midwest.

Downtown Ann Arbor didn’t “just happen to” evolve, Hewitt said. If the DDA had not been there to build six new parking structures, to rebuild the sidewalks, and to reconstruct the two remaining parking structures, the downtown would not look the way it does now. The “city fathers and the city council” 30 years ago had the wisdom to recognize that there would need to be major infrastructure improvements, if the downtown was going to prosper in the long-term, Hewitt said. They had the wisdom to set money aside, knowing that there would always be a political demand to be able to use now what money you have now. But by putting that money aside, the DDA was able to invest in those infrastructure improvements that allow the transformation of the downtown.

Without parking to support people in stores and restaurants, Ann Arbor could not have evolved to what we have now, Hewitt said. He hoped that the current city government can look forward and say that we need to set money aside to be able to do those infrastructure improvements in the future – whatever they might be – so that “our children and grandchildren” can enjoy the kind of vibrant downtown that we have now. It doesn’t just happen, Hewitt said. You need to put money aside, to be able to do those sorts of improvements – whatever they look like in the future. You have to keep reinvesting, or you’re not going to have economic development, which seems to be everyone’s goal, he said.

So as soon as there is clarity from the city council, Hewitt said, the operations committee needs to focus on the budgetary changes that need to be made and what projects need to be removed or adjusted. The full board also needs to engage in a discussion on that.

Later in the conversation, Russ Collins adopted the framing of the issue that Roger Hewitt had used – comparing the time when the DDA was established in 1982 to now. Some back-and-forth between Hewitt and Collins established that in the early 1980s the city levied about $1.5 million worth of taxes in what is now the DDA district. And the parking system lost about $250,000 a year. So Collins put the net proceeds to the city of the DDA district in that era at about $1.25 million. According to Hewitt, the city today levies about $4.1 million worth of taxes a year in the DDA district, and receives about $3.1 million a year from gross parking revenues, not to mention the $508,000 for the police courts building. Collins called it a tenfold increase in revenue to the city compared to the time when there was no downtown development authority. That would not have happened, Hewitt said, if there had been no reinvestment in infrastructure.

During his remarks to the board, Ray Detter reported that some members of the downtown citizens advisory council (CAC) were bewildered by what he characterized as the negative attack on the DDA, because it seemed to some of the members to be irrational. The downtown requires special attention, he said. And the downtown development authority is especially equipped with a creative focus and the economic tools for strategic planning that allows for long-term community goals, Detter said.

Chapter 7 Amendments: Board Remarks – City-DDA Partners?

Mayor John Hieftje added that he shared Hewitt’s concerns about the budget, both long- and short-term. He said that one of the problems is that there is a “deficit in education” about what the DDA does. He felt that some of that lack of education had played out during the discussion by the city council and some of it has played out in the community. He also attributed part of the problem to the fact that there are some new councilmembers.

As the recession took place, and city governments across the state really found themselves in great difficulty, the city of Ann Arbor had made it through the recession with essentially the same millage rate as it had before, Hieftje said. Many cities across the state cannot say the same, he noted. He pointed out that in Grand Rapids, the income tax had been raised. [Ann Arbor does not have an income tax.]

But there was also a time during that period when the city needed some help, he noted, and the city had reached out the DDA. One of those times was when Washtenaw County had told the city that the 15th District Court had to move out of the county courthouse. So the city had embarked on a project to build a new police/courts building – and the DDA had “stepped up to the plate,” he said, and committed to that [in the form of an $8 million grant paid in roughly $508,000 million installments]. Implicit in that was an understanding, he felt, that the city would not turn around and change the DDA’s funding and its ability to uphold that commitment.

And then, he said, the city had reached out to the DDA and renegotiated the contract under which the DDA operates the public parking system – something that Hieftje said was not always an easy conversation. Implicit in that is the fact that the city and the DDA are partners, he said. Even though a lot was said on Monday night at the city council meeting, the partnership between the city and the DDA is something that hasn’t been explored enough, he said. The DDA has been an excellent partner for the city, Hieftje maintained – and the police/courts building, and the renegotiation of the parking agreement showed that. These were not actions that the DDA had to take, he contended. But implicit in all of that was the idea that the city would not then come back and pull the rug out from under the DDA.

Hieftje noted that he had a fiduciary obligation to both the DDA and the city – but he said he felt his greater priority was to the city budget. “We appreciate the help that the DDA has offered,” he said. Hieftje felt that more communication was needed to make sure that people are aware of the partnership between the city and the DDA. The commitments were made in good faith, Hieftje said. He hoped that the city would be able to uphold its side of the good-faith agreement.

Later in the conversation, Keith Orr picked up on Hieftje’s remarks, saying that the ordinance change had been a surprise to him. Although the relationship between the city and the DDA had included difficult discussions over the years, it’s been a relationship that has worked very well, he said. “Why are we fixing something that does not appear to be broken?”

Chapter 7 Amendments: Board Remarks – Board Composition

Bob Guenzel stressed how important the long-term fiscal stability had been for the DDA, and he did not think it was a good idea to change it. But he focused his remarks on the governance issues and the term limits. Guenzel noted that he had been involved with county government “for a while.” [An understatement – Guenzel worked at for the county for 37 years, including 15 years as county administrator.] He had observed that most boards and commissions do not have term limits. They have limits in the sense that every two or four years the appointing body can reappoint members. He noted that all the DDA board members were appointed with the approval of the city council. So the city council can limit a DDA term whenever they want to. It’s important also, he pointed out, to have a mix of people who are “seasoned,” and who can see the long-term, because they have been there from the beginning. He felt that there’s been a disadvantage of not having that seasoning in the state legislature, which now has term limits.

For a body such as the DDA, which is very focused on a specific mission, Guenzel thought it was very important to have folks who been a part of the mission, and who can carry that mission forward. He saw no reason to impose term limits on DDA board members.

Later in the conversation, John Mouat added that as a non-politically-connected sort of person, he wanted to express his gratitude, saying that he saw value in having people on the DDA board who know how things work at the city and county, and the machinations of it all. For those people who are not involved politically, he said, it’s difficult to understand how all the moving pieces work together. So he appreciated the elected officials being on the board. He also said he’d never had an experience where any of them had tried to coerce, or direct him in any way.

Monthly Parking Report

Roger Hewitt delivered the monthly parking report. The most recent monthly figures were for February 2012. He said that the operations committee is still working on getting more detailed reports on actual hours used. That will allow the DDA to get better insight into how the system is actually working.

Revenue for February 2013 was $1,532,504 compared to $1,362,989 last year – a 12.4% increase. That amount includes revenues from parking meters and from monthly permits. The number of hourly patrons in February 2013 was 172,385 compared to 174,492, or a drop of 1.2%.

The comparison was impacted by the fact that February 2012 was a leap year, with 29 days – something that Russ Collins highlighted. He contended that the reduced usage was almost entirely explained by a month with one less day. John Splitt also pointed out that it was colder this year.

Ann Arbor Public Parking System: Revenue

Ann Arbor Public Parking System: Hourly Patrons

Ann Arbor Public Parking System: Revenue per Space – System

Ann Arbor Public Parking System: Revenue Per Space – Surface Lots

Ann Arbor Public Parking System: Revenue per Space – Structures

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: Rail Station

Roger Hewitt told the board he’s part of a study committee that’s looking at station locations for north-south commuter rail service (WALLY). The committee had its first meeting, and a broad swath of the city is under consideration for a possible location – from Hill Street to Summit Street. [Initial reports from the Ann Arbor Transportation Authority indicate that a station stop along the track somewhere between Washington and Liberty streets is one strong possibility.] He noted that it’s an alternatives analysis, funded by money granted to the AATA from the federal government and the Michigan Dept. of Transportation. The study is in the preliminary information-gathering stage.

Comm/Comm: Bike House

John Mouat gave an update on the Bike House under construction in the Maynard parking structure. There’s a possibility that a soft launch to the facility will take place during bike-to-work week, which is May 13-19 this year.

Comm/Comm: Review of D1 Zoning

During his regular report from the downtown citizens advisory council (CAC), Ray Detter told the board that CAC supports the long-promised review of A2D2 zoning to make recommendations on revising the current D1 zoning district.

Comm/Comm: Ice-Skating Rink

During public commentary at the start of the meeting, Alan Haber noted that his group – which is advocating for an ice-skating rink to be installed on top of the Library Lane underground parking garage – had met with the DDA’s partnerships committee in the previous month. He reminded the board of the continuing effort to consider the space as a civic space – for community use, whether it is a commons or a park. Whatever the ultimate name of it is, he said, the idea is that the centrally located space should be developed for citizen use, for all the people, so that Ann Arbor has a central place, however you want to name it – a place that invites all the citizens as a whole.

While longer-term planning is going on – like the Connecting William Street project and the work being done by the park advisory commission’s subcommittee – Haber felt now is the opportunity for the Ann Arbor Downtown Development Authority to experiment with short-term uses that might draw the public to that space. The efforts to generate activity on top of the Library Lane parking structure should be integrated with programming efforts for Liberty Plaza, he said.

The concept for a temporary ice-skating rink took form last November, he told the board – as his group had found out about the possibility of using synthetic ice. Synthetic ice has been used in places where temperatures are not as cold as they used to be, or in the South, for recreational skating. So his group had developed a proposal based on that. And they are now dealing with a range of questions that their proposal has generated. How effective is the synthetic ice? How large a rink could be established?

Haber told the board that he expected his group would return to the next meeting of the partnerships committee with answers to several of those questions. He wanted to convey to the board that many people desire a central place in Ann Arbor that could begin to be called the heart of town.

Comm/Comm: Expand DDA Area, Sunday Parking Charges

Introducing himself as a recent candidate for representative of the 53rd District of the Michigan House, Thomas Partridge accused the DDA board of conducting its meetings as “shadow meetings” of the city council. He called on the city to reorganize the DDA’s charter to expand the downtown fiscal area – to include every important housing development within the city. The DDA should be given a new charter and a new purpose to provide adequate housing. He called Ann Arbor a segregated city that is not well-served by mayor John Hieftje and the Ann Arbor city council.

Partridge criticized the free parking that is provided on Sundays, saying that was giving away 1/7 of each week’s revenue, on the theory that people wouldn’t want to park on Sundays. A parking fee should be charged on Sundays, he said, even if it’s a reduced rate.

Present: Nader Nassif,  Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Sandi Smith, Newcombe Clark.

Next board meeting: Noon on Wednesday, May 1, 2013, at the DDA offices, 150 S. Fifth Ave., Suite 301, Ann Arbor. [Check Chronicle event listings to confirm date]

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