This conceptual design by Wally Hollyday for the Ann Arbor skatepark at the northwest corner of Veterans Memorial Park was approved by the city council on Jan. 7, 2013.

The originally approved budget for the project, to be located at the northwest corner of Veterans Memorial Park, was $800,000 – though the expectation was that the project would cost about $1 million. The total budget now – including the construction contract, 10% contingency and $89,560 design contract – is $1,224,311, or $424,311 higher than the originally budgeted $800,000.

Also on June 18, PAC recommended approval of the operating agreement between the city and the nonprofit Friends of the Ann Arbor Skatepark. Trevor Staples, FAAS president, was on hand at the meeting to field questions from commissioners. [.pdf of operating agreement]

The 11-page agreement outlines the responsibilities and scope of services to be provided by each entity. Regarding maintenance, for example, the agreement states:

Maintenance of the Ann Arbor Skatepark shall be provided by the City, a contracted service under the City’s control, or by volunteer groups that are programmed through the City’s volunteer program opportunities. City shall provide general oversight of the Skatepark infrastructure, such as making periodic inspections similar to neighborhood playground inspections. The City shall maintain records of staff costs, materials and supplies, and equipment costs related to the maintenance of the Ann Arbor Skatepark.

A later section on funding states: “The City, at its discretion, may decide to contribute to the payment of maintenance and operations for the Ann Arbor Skatepark.”

The skatepark will be guided by a new skatepark advisory committee, with members to be appointed by the city council and meetings held at least twice a year.

The city had issued a request for proposals (RFP) to build the skatepark earlier this year. Krull had originally turned in the lowest of three bids, at $1,191,738. Other bids were from Bernco Inc. ($1,251,104) and Gerace Construction ($1,275,273). Because all bids were considerably higher than the anticipated budget, parks staff negotiated with Krull to lower the amount by changing elements of the project. Those changes, according to a staff memo, include “replacing decorative ground cover with grass, plant plugs with seed, replacing rebar with structural fibers, and eliminating some decorative boulders.” In addition, “soil spoils” will be left on site to save on hauling costs. Krull also offered to cut $10,000 from its contract. All of these adjustments reduced the contract to $1,031,592.

Funds to pay for the skatepark include a $400,000 grant from the Washtenaw County parks & recreation commission, $300,000 from the Michigan Dept. of Natural Resources Trust Fund, and $100,00 raised by the Friends of the Ann Arbor Skatepark, which paid for the skatepark’s design. According to a staff memo provided to PAC, additional revenues for the project have now been identified from these sources:

• $155,463.60 from uncommitted funds available in the parks maintenance and capital improvements millage fund balance. It represents about a quarter of the total $600,000 in the uncommitted fund balance.
• $80,000 from the city’s stormwater capital budget for rain gardens, to be repaid as a loan to the State Revolving Fund (SRF). The city expects a 50% loan forgiveness on this amount.
• $32,356 from the FY 2014 parks memorial and contributions fund (the Feldman Trust) for landscaping plantings.
• $30,356 from the FY 2014 parks maintenance and capital improvements millage.
• $22,977 from the FY 2014 parks and recreation services general fund operating budget – from the “parks fairness” funds resulting from other budget amendments made by the council.

In addition, up to $103,159.26 in uncommitted funds is available in the parks maintenance and capital improvements millage fund balance to cover a 10% construction contingency. Any unspent portion of this amount will be returned to the fund balance.

These recommendations will be forwarded to the city council for consideration. The council had approved the skatepark’s design at its Jan. 7, 2013 meeting. It was designed by Wally Hollyday whose firm, Wally Hollyday Skateparks, also has construction oversight of the skatepark.

This brief was filed from the second floor council chambers at city hall, where PAC holds its meetings. A more detailed report will follow: [link]

From right: Before the Feb. 21, 2013 meeting of the AATA board, Terry Black (manager of maintenance) and Eli Cooper (AATA board member) inspect the construction site of the new Blake Transit Center on Fifth Avenue in downtown Ann Arbor. It’s using an earth retention system similar to that used for the construction of the underground Library Lane parking garage located across the street – but on a much smaller scale. (Photos by the writer.)

The resolution approved by the board includes the AATA’s view that “an increased level of state transit funding such as has been proposed by Governor Snyder would assist AATA in maintaining existing service and operating expanded transit service to satisfy the expressed public demand …” To increase funding for transportation as a general category by $1.2 billion – including roads, bridges and public transportation – Snyder’s budget would rely on proposed increases to the state’s gasoline tax and to vehicle registration fees.

The Michigan state constitution requires that 90% of all fuel taxes be used to fund the maintenance of streets, roads and bridges designed for motor vehicles that use tires. Part of the remaining 10% can be used to fund public transportation operating expenses. Partly as a function of the overall increase, Snyder’s budget would increase the amount of local operating assistance for transit agencies statewide from around $166 million for each of the past two years to about $181 million.

The AATA’s estimated budget for the next fiscal year (2014) is being reported to the state of Michigan as totaling $33,653,000. Those total expenses would be covered by the following breakdown of revenue estimates: federal funds ($4,276,104); state funds ($9,939,035); local funds ($12,088,861); fare revenue ($7,258,000); and other funds ($91,000). The AATA’s current year’s budget – for FY 2013, which ends on Sept. 30 – calls for $32,700,181 in expenditures.

The AATA’s portion of the $166 million in state operating assistance last fall took an unexpected roughly $800,000 dip around the time the AATA set its budget for the current fiscal year. The reduction in funding relates to the way the state’s formula applies when spending is reduced by other transit agencies in the AATA’s category. AATA CEO Michael Ford told the board at its Feb. 21 meeting that he’d been to Lansing and had received assurance that an additional appropriations bill – which is currently the “placeholder” bill SB 126 – is likely to be passed, and would restore the $800,000.

Meanwhile, the most recent financial update through the first four months of the 2013 fiscal year – which started in October – shows the AATA with a slight positive variance. But the AATA is operating with a level of cash reserves that equates to about 2.88 months of operating expenses. Board policy is to keep a minimum of 3 months’ worth reserves on hand. Notes to the treasurer’s report indicate that for the year, the AATA now expects about $160,000 less in fare revenues that it had budgeted – based on fewer rides being taken by University of Michigan affiliates than the AATA had projected.

Besides authorizing the application to the state of Michigan for state operating assistance, the board authorized two contracts in connection with construction on the new downtown Ann Arbor Blake Transit Center – one for the elevator and the other for millwork. Both contracts were under the project’s budgeted amount for those items.

The board also approved a contract for the printing of its RideGuide, a printed version of its schedules. Also authorized was a contract to perform environmental cleanup from a gas line that had been seeping at the AATA’s facility on South Industrial Highway.

Updates at the meeting included notes on the board’s upcoming retreat, which is to include a discussion of AATA customer needs. That led to comments from the public asking the board to think about who the AATA’s customers actually are.

During the meeting, the board also held a closed session to conduct a performance review for CEO Michael Ford.

State Funds: Annual Application

The board was asked to approve its annual application for state operating assistance under Act 51.

The estimated expenses for the Ann Arbor Transportation Authority’s fiscal year 2014 budget are being reported to the state of Michigan as totaling $33,653,000.

Those total expenses would be covered by the following breakdown of revenue estimates: federal funds ($4,276,104); state funds ($9,939,035); local funds ($12,088,861); fare revenue ($7,258,000); and other funds ($91,000).

The current year’s AATA budget – for FY 2013, which ends on Sept. 30 – calls for $32,700,181 in expenditures. So the currently estimated expenses for FY 2014 reflect an increase of about $950,000, or about 3%.

State Funds: Board Deliberations

Sue Gott asked AATA manager of service development Chris White to come forward to summarize what the resolution was for. White explained that the application is an annual process, called for in Act 51, which includes the deadlines. For the capital portion of the estimate, the AATA uses figures from its federal capital and categorical grant program. White called the requirement to estimate a budget for next year “a little strange” – but explained that the state uses those estimates from transit authorities throughout the state for planning purposes. The AATA’s estimate, White said, is based on this year’s budget.

Charles Griffith asked White about the amount of state aid estimated in the budget that’s being submitted – and whether it reflected the reduction in state operating assistance, compared to last year. White indicated that he’d used the percentages that the state had provided in its instructions. He noted that the state legislature is still looking at possible allocation of funds to make up for that reduction this year, and the Gov. Rick Snyder had proposed a budget this year with additional transportation funding.

By way of additional background, the board’s resolution included a measured expression of support for that additional funding:

BE IT FURTHER RESOLVED that an increased level of state transit funding such as has been proposed by Governor Snyder would assist AATA in maintaining existing service and operating expanded transit service to satisfy the expressed public demand, and …

Outcome: The board voted unanimously to approve the application for state operating assistance.

State Funds: Overall AATA Finances

By way of background on the “resolved clause” in the board’s resolution alluding to Snyder’s budget, the governor’s proposal would increase funding for transportation as a general category by $1.2 billion – including roads, bridges and public transportation. To fund that increase, Snyder’s budget would rely on proposed increases to the state’s gasoline tax and to vehicle registration fees.

The Michigan state constitution requires that 90% of all fuel taxes be used to fund the maintenance of streets, roads and bridges designed for motor vehicles that use tires. Part of the remaining 10% can be used to fund public transportation operating expenses. Partly as a function of the overall increase, Snyder’s budget would increase the amount of local operating assistance for transit agencies statewide from around $166 million for each of the past two years to about $181 million.

In a telephone interview with The Chronicle, members of Snyder’s budget team characterized the allocation in the proposed budget for the next fiscal year as equating to the 9% level, compared to the constitutional 10% cap. [Added on Feb. 26 after initial publication: In a telephone interview with The Chronicle., Michigan Department of Transportation officials put the percentage more precisely at 8.8%. That's based on $274 million for the comprehensive transportation fund (from which the local operating amount of $181 million comes) divided into a $3.1 billion total transportation fund.]

By way of background on Griffith’s point about the reduced funding for this budget year, the AATA’s portion of the $166 million in state operating assistance took a roughly $800,000 dip last year – compared to what AATA expected at the time the AATA set its budget. The reduction in funding relates to the way the state’s formula applies when spending is reduced by other transit agencies in the AATA’s category. For more detail on that issue, see “AATA OKs Smaller Budget, Drives Ahead.”

During his oral report to the board, before the vote on the annual application for state operating assistance, AATA CEO Michael Ford told the board that he’d been to Lansing and received assurance that an additional appropriations bill – which is currently the “placeholder” bill SB 126 – is likely to be acted on and would restore the $800,000. The AATA is also working thorough the Michigan Public Transit Association (MPTA) to achieve a longer-term solution on the issue.

Meanwhile, the most recent financial update through the first four months of the 2013 fiscal year (which started on Oct. 1) shows the AATA with a slight positive variance. Notes to the treasurer’s report indicate that for the year, the AATA now expects about $160,000 less in fare revenues that it had budgeted – based on fewer rides being taken by University of Michigan affiliates than the AATA had projected.

Reporting from the performance monitoring and external relations committee, Roger Kerson said the AATA is operating with a level unrestricted fund balance that equates to about 2.88 months of operating expenses. Board policy is to keep a minimum of 3 months’ worth reserves on hand. Kerson noted that it was important to have a contingency, in case the state legislature does not act to restore funding.

Ford’s interest in addressing the reserve issue is reflected in his proposal for the organizing theme of the board’s upcoming retreat in May: “AATA will develop balanced operating budgets for FY 2014 and FY 2015 and will restore and maintain its unrestricted net asset balance to 3.0 months of operating expenses.”

The financial pressure the AATA is now experiencing is not only due to the unanticipated $800,000 reduction of state operating assistance. The AATA chose to add some expanded services in anticipation of additional local funding sources in connection with the formation of a countywide authority. With that specific effort now defunct, the AATA is now continuing to discuss various possibilities for funding those expanded services – which include more frequent service on Route #4 (last year) and Route #5 (this year). Kerson, reporting from the performance monitoring and external relations committee, said early indications are that the Route #5 service improvements are resulting in increased ridership, like those for Route #4 had shown.

The AATA’s discussions on additional local funding are taking place with the “urban core” communities, representing a much smaller area than a countywide footprint. These communities include the cities of Ann Arbor, Ypsilanti, and Saline, as well as the townships of Pittsfield and Ypsilanti. Involvement with the townships of Superior and Ann Arbor is also a possibility.

At the board’s Feb. 21 meeting, Ford indicated a forthcoming meeting of the urban core community leaders on March 28. The AATA’s current position is that elected leaders need to decide for themselves what they’re willing to support, and then the AATA will in turn support that direction. That contrasts with the leadership approach the AATA had taken on the countywide initiative.

The issue is somewhat complicated by the formation of a regional transit authority (RTA) late last year by the lame duck state legislature. At the Feb. 21 meeting, Ford indicated that he’d met with both Washtenaw County appointees to the four-county authority: Richard Murphy and Liz Gerber.

Transit Center Contracts: Elevator, Millwork

The board was asked to approve contracts for millwork and an elevator for the new Blake Transit Center, currently under construction on Fifth Avenue in downtown Ann Arbor.

The AATA had originally awarded a $139,451 contract to ThyssenKrupp for the elevator. But when ThyssenKrupp made changes to the scope of the project that had an impact on the price, the AATA decided to rebid the project. The winner of the rebid work was Otis Elevator, which offered to install an elevator for $108,100.

The board was also asked to approve an $80,255 contract with SBD Commercial Interiors for manufacture and installation of custom millwork in the new transit center. The budget had allowed for as much as $120,000 for the work.

Transit Center Contracts: Board Discussion

During Michael Ford’s oral report to the board, he characterized the construction of the new Blake Transit Center as on schedule with an anticipated completion date of October 2013.

Asked to comment on the contracts, AATA maintenance manager Terry Black, who’s managing the BTC construction project, explained that when the AATA negotiated the final terms of the job with the contractor, there were a lot of additional terms the contractor put in – to the point that AATA decided to rebid the project. Otis Elevator’s bid then came in under what had been budgeted.

Black also told the board that the $120,000 in the budget for millwork had been a placeholder, and the fact that the bid came in significantly under meant that the AATA had gained some savings on the project.

[When the board approved the project on Oct. 18, 2012, some items in the budget had been removed, in order to reduce the cost from $8.5 to $8 million. Of the three major items slated for removal – automatic ticketing kiosks, real-time bus arrival information displays, and LEED certification of the building – only the LEED certification was added back in by the board at their Oct. 18, 2012 meeting, at a cost of $80,000. The board indicated at the meeting that they were keen to see costs reduced in the course of the project, with the idea that the savings might be able to fund the automatic ticketing and real-time bus arrival elements.]

Board chair Charles Griffith asked if there were additional contracts going out to bid for the construction project. [The board had already approved a few dozen construction contracts at its Oct. 18, 2012 meeting.] Black described a few other contracts, including one for the security system. The scope of work has been completed for that, and the request for proposals (RFP) is being drafted. An RFP for network cabling will also be going out, as well as one for furniture.

Outcome: The board voted unanimously to approve the elevator and millwork contracts.

RideGuide Print Contract

The board was asked to approve a contract with Grand River Printing/American Litho from Belleville, Mich. to print the RideGuide. The RideGuide is an 84-page publication with bus route maps and schedule information for all Ann Arbor Transportation Authority bus routes. The board was asked to approve a one-year contract for $84,000 for printing and shipping. The contract can be renewed in one-year extensions up to five years.

The AATA updates its schedule and prints new RideGuides three times a year – in January, April, and August. The cost charged by Grand River works out to about $27,600 per printing. And the staff memo accompanying the resolution indicates that the price bid by Grand River is about $0.36 per booklet. That works out to about 76,600 RideGuides per printing.

Board deliberations were brief. Roger Kerson noted that Grand River was the low bidder, it was a union job and the firm had done the printing before.

Outcome: The board voted unanimously to approve the contract for printing the RideGuide.

Remediation of Gas-Contaminated Soil

The board was asked to approve a $119,980 contract with PM Environmental for remediation of contaminated soil at the AATA headquarters, located at 2700 S. Industrial Highway.

The remediation activity dates back to 2010, and will address an in-ground gas leak that was discovered when the AATA upgraded a fuel tank monitoring system. A final assessment report (FAR), based on monitoring wells and ground water sampling, was filed with the Michigan Dept of Environmental Quality on Dec. 15, 2011.

The amount will be reimbursed by the AATA’s insurance carrier, Chartis, which is a subsidiary of American International Group Inc. (AIG). The AATA’s deductible for its policy was $25,000, which the AATA has already expended.

Remediation: Board Deliberations

Reporting from the performance monitoring and external relations committee, Roger Kerson indicated that the fuel leak problem was found during an annual inspection. The contract on the agenda was for remediation of the leak, he said. Kerson noted that the insurance company would be reimbursing the AATA for the expended amount, and there’s been close communication with the Michigan Dept. of Environmental Quality (MDEQ).

When the board reached the item on the agenda, Kerson asked AATA maintenance manager Terry Black what the timelines for monitoring would be. Black explained that PM Environmental would come in and do another benchmark study, take samples, do some analysis, and determine the chemical they need to counteract the contamination. Then the company will excavate a contained area, put new soil in, and install additional monitoring wells over the next year to ensure total cleanup. That process would take over a year, Black said. Kerson wanted to make sure that the results of that monitoring are shared with the board.

Sue Gott wanted to know how the city of Ann Arbor was kept up to speed on the work. Black indicated that the permit for the work was a mechanism by which the city and Washtenaw County were kept apprised of the situation.

Board chair Charles Griffith inquired about how the leak was found. Black described how the AATA was doing an upgrade to the monitoring system for the fuel tanks. During that process, a seeping connection was discovered. It was a “reportable incident,” he said. Griffith asked how old the tanks in the ground were. AATA controller Phil Webb said the tanks are original to the building, which was constructed in 1984. Black indicated that the monitoring system now in place works 24/7.

Eli Cooper asked about the life expectancy of the tanks. Black allowed that was a good question. The tanks are made of fiberglass – and as long as the AATA has monitoring equipment, the AATA thinks it’s ok.

Outcome: The board voted unanimously to approve the contract for soil remediation.

Closed Session on CEO Evaluation

The board held a closed session for the evaluation of CEO Michael Ford’s performance. It lasted about 45 minutes. For the last 10 minutes or so, Ford was invited into the closed session to join the board. Ford’s last annual evaluation and contract revision was done on Dec. 15, 2011, when the board authorized an increase in base salary of $4,800 to $164,800 annually.

Outcome: The board did not vote on a resolution regarding Ford’s contract. On emerging from the closed session, they came back into open session only for the purpose of adjourning the meeting.

Communications, Committees, CEO, Commentary

At its Feb. 21 meeting, the board entertained various communications, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Retreat – Who are the AATA’s customers?

In his oral report to the board, CEO Michael Ford said that the board’s planning and development committee (PDC) is beginning to shape the agenda for the annual board retreat, which will take place in May.

Reporting from the PDC, committee chair Sue Gott confirmed that the last committee meeting had included discussion of the retreat. The consensus of the committee, which besides Gott includes Eli Cooper and Anya Dale, was in favor of a retreat that was oriented less toward reports and presentations and more toward interaction and discussion among board members. Gott has created a file on the retreat, which she held up to show the board, and had already included a lot of material from staff.

Gott called the retreat an important opportunity for the board to look forward and be visionary. She noted that Cooper had suggested looking at the AATA “customers” and focusing on their needs.

During public commentary at the conclusion of the meeting, Jim Mogensen picked up on the idea of the AATA’s customers, asking: Who are the AATA’s customers? Is it the people who are already living in the urban core area, or is it the people who are commuting to the urban core area?

He noted that if you use a metric of productivity – passengers per service hour – then “commuters will always win.” That’s why he’d raised the issue when the Plymouth Road park-and-ride was constructed. The mid-day service frequency for that route had been reduced to hourly, he said. As Mogensen looked at possible future AATA initiatives, a problem could arise where all routes in Ann Arbor would be reduced to hourly service, in order to free up enough money, for example, to fund the operation of the high-capacity connector that’s currently being studied. [The corridor runs from US-23 and Plymouth southward along Plymouth to State Street and farther south to I-94. The current study is an alternatives analysis phase, which will result in identifying a preferred mode (e.g., bus rapid transit, light rail, etc.) and the location of stations and stops.]

Mogensen saw the issue of extending AATA service to the University of Michigan’s East Ann Arbor Medical Center – on Plymouth Road east of US-23 – as “a five- or six-figure problem.” When it was finally resolved, Mogensen said, it would probably be on the lower end of that estimate. He felt that eventual operation of the connector service was a “seven- or eight-figure problem” for the university. If there was difficulty in figuring out how to maintain the Chelsea Express service – which Mogensen called a “six-figure problem” – he wondered how the much larger challenge of the connector service would be solved.

Also likely to be included in the retreat are the AATA’s finances. CEO Michael Ford’s proposed organizing theme for the retreat is this: “AATA will develop balanced operating budgets for FY 2014 and FY 2015 and will restore and maintain its unrestricted net asset balance to 3.0 months of operating expenses.”

Comm/Comm: Title VI Due Dates

At the board’s Jan. 17, 2013 meeting, Jim Mogensen had addressed the board, saying that he wanted to make sure that people were aware that the “urban core” transit plan would need to have a Title VI review – and because it might involve a reduction in service, it could be more complicated.

He also had pointed out that there’s an April 2013 Federal Transit Administration deadline for a three-year plan that includes a public input process. He’d wanted to make sure that the AATA was aware of that and to make sure it happens. He didn’t want it to get lost in the shuffle.

So at the board’s Feb. 21, 2013 meeting, Mogensen addressed the board saying that based on a conversation he’d had with Chris White, AATA’s manager of service development, he understood that there had been some follow-up by the AATA staff on the question of the deadline. And Mogensen had the understanding that there’d been miscommunication between different levels of the FTA. He indicated he was satisfied that the April 2013 deadline wasn’t applicable to the AATA, but wanted to make sure that the AATA documented that on the record so that it’s brought out and made clear.

After the meeting, White clarified to The Chronicle that the AATA must submit a service plan to the FTA every three years, and it had last submitted one in December 2011. So AATA’s next plan must be submitted in 2014.

Comm/Comm: Public School Busing

During his oral report to the board, CEO Michael Ford noted that in the fall of 2012, three existing Ann Arbor Public Schools bus routes were replaced with AATA routes, with the cost for rides reimbursed by AAPS. A working group of the AATA and the AAPS has now identified six additional possible routes that might be feasible for implementation in the fall of 2013. Ford noted that one issue with middle school students is that parents might have concerns about younger students riding public buses. He also noted that a lot of students for AAPS bus service live outside the AATA service area. [The AAPS district includes significant areas outside the city of Ann Arbor.]

Comm/Comm: WALLY

In his oral report to the board, CEO Michael Ford gave an update to the board on the north-south commuter rail service known as WALLY (Washtenaw and Livingston Railway). [The AATA received a federal grant last year, at its Aug. 16, 2012 meeting, to proceed with station location design.] Ford described how the work on station location design is proceeding.

Possible WALLY station location for downtown Ann Arbor. (Map by The Chronicle)

The project is currently undertaking station location studies for five communities: Ann Arbor, Whitmore Lake, Hamburg Township, Genoa Township and Howell. In Ann Arbor, attention is focused on the Barton Road location and how a station can be designed that overcomes the constraints imposed by a large drainage culvert. Future phases would also include detailed designs of each site selected in the initial phase, with additional station sites in Ann Arbor – a downtown location (probably between Liberty and Washington streets, according to a staff memo) and one near the University of Michigan football stadium.

Ford’s written report to the board describes being encouraged to meet with Ward 5 Ann Arbor councilmembers Chuck Warpehoski and Mike Anglin. The report’s phrasing seemed intended to convey that a possible location for a station was in their ward. However, the wording did not accomplish that: “We were encouraged to meet with Fifth Ward Councilmembers Chuck Warpehoski and Mike Anglin whose project this is.” At the council’s Feb. 29 19 meeting, Anglin spoke in vague terms about information that had been circulating. He said the information suggested that he was supportive of the WALLY project – when he is not. It’s possible that Ford’s written update was the source of the confusion.

Comm/Comm: Website

In his oral report to the board, Ford indicated that external testing of the AATA’s new website had begun that week. It will continue until the beginning of March.

Comm/Comm: AirRide

Ford also reported that for the fourth month in a row, a zero balance was owed to Michigan Flyer for the operation of the Ann Arbor to Detroit Metro airport service, called AirRide. That’s despite a post-holiday decline in ridership.

Ford described how a meeting with Detroit Metro Airport officials had resulted in an agreement that a link to the AirRide service would be added to the airport’s website.

During his report from the performance monitoring and external relations committee, Roger Kerson mentioned the possibility of eliminating the University of Michigan campus stop as a way of saving some money.

Comm/Comm: LAC

Rebecca Burke reported from the AATA’s local advisory council (LAC), a group that provides input and feedback to AATA on disability and senior issues. She said that AATA manager of service development Chris White had given the group a presentation AATA’s application for operating assistance, and how it pertains to the A-Ride program, a shared-ride transportation service for people with disabilities.

Comm/Comm: General Criticism

Thomas Partridge complained about the limited thinking and limited vision of local government leaders. He told the board that he’d gone before the Ann Arbor city council and called for the recall and resignation of those who’d appointed the AATA board. He complained about “high-income managers” with 30 years of seniority who felt they were entitled to lifetime employment.

Present: Charles Griffith, Jesse Bernstein, Eli Cooper, Sue Gott, Roger Kerson, Anya Dale.

Absent: David Nacht.

Next regular meeting: Thursday, March 21, 2013 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [Check Chronicle event listing to confirm date]

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David Olson, vice president of Granger Construction Co., delivered a letter to the DDA board during public commentary, which questioned the way concrete bids were handled for the DDA's underground parking garage. The garage is currently under construction along Fifth Avenue. (Photos by the writer.)

Though not addressed by the board as business items, two areas of controversy emerged during public commentary.

One involves the award of a bid as part of the DDA’s construction of the underground parking garage along Fifth Avenue. The contract for construction management for the entire project was awarded to The Christman Co. However, under the terms of the contract, Christman must bid out various components of the project, like the concrete work – even though Christman has the capability of doing that work itself.

The low bid for the concrete work was submitted by Granger Construction Co., at $21.5 million. But Christman awarded the contract to Christman Constructors Inc., which had submitted a bid of $22 million. Christman’s selection as construction manager of the project had been finalized at the DDA board’s Nov. 4, 2009 meeting with a guaranteed maximum price of $44,381,573. Representatives of Christman and Granger aired their differing points of view on the concrete bid at Wednesday’s meeting, with DDA board chair John Splitt concluding that he was satisfied the process had been fair.

The other point of controversy arising during public commentary is the probable $2 million payment this year by the DDA to the city of Ann Arbor – which it has no obligation to make under its current parking agreement with the city. The city’s budget book for FY 2011, released on Monday, does not factor in a payment from the DDA. Instead, it shows a $1.5 million shortfall for the year. The DDA’s parking report to the city council hints at the possibility that the DDA would take responsibility for the ticketing of parking violations. That change in enforcement could be included in the renegotiation of the parking agreement.

Other business transacted by the board on Wednesday included a resolution calling on the city council to revise its sign ordinance so that downtown merchants could use sandwich board signs legally. A recent attempt to revise the ordinance by the council was voted down at its Feb. 16, 2010 meeting.

DDA Parking Report to the City Council

At its Dec. 21, 2009 meeting, the Ann Arbor city council considered a resolution addressing parking revenues. The resolution was brought forward by Sandi Smith, who serves on the city council representing Ward 1, as well as on the DDA board. From The Chronicle’s coverage of that meeting [emphasis added]:

In its original form, the resolution had three key points: (i) net revenues from the Fifth and William (old YMCA) lot would go into city rather than DDA coffers, (ii) downtown parking meters would operate and be enforced until 10 p.m., which is later than their current cutoff of 6 p.m., and (iii) the city would discontinue its plan to install its own parking meters in neighborhoods near the downtown.

With respect to its substance, the part of the resolution generating the most resistance was (ii) with its extended hours of meter enforcement for on-street parking. Smith swapped out that provision for one somewhat more vague, and the council eventually adopted a resolution that requested a report from the DDA on the issue of extended meter enforcement:

RESOLVED, The City requests that the DDA present a plan to Council at its April 19, 2010 meeting for a public parking management plan. The plan should include but is not limited to:

• a communication plan to Downtown patrons, merchants and evening employees
• options for low cost parking for evening employees
• variation of rates and meter time limits based on meter location
• hours of enforcement

It is this plan that the DDA board voted to endorse on Wednesday. Final tweaking will take place at the board’s partnerships committee meeting next week.

The report is structured around eight strategies:

Strategy 1: Downtown curbside public parking should be managed to create turnover at the most convenient, commercial locations so these spaces can be more easily used by a large pool of downtown users.

Strategy 2: A comprehensive TDM [transportation demand management] strategy should be developed and utilized to support the downtown evening economy, including a management strategy for on‐street parking spaces, creation of additional evening employee parking/transportation options and communication strategies.

Strategy 3: Develop new off-street parking strategies to make it more attractive for patrons to park off‐street in public parking facilities, and thus relieve pressure on curbside parking, support downtown commerce and entertainment, and increase patron awareness of their parking use and costs.

Strategy 4: Develop policies and plans to add and subtract public parking downtown based on redevelopment, walkability, and transportation goals.

Strategy 5: Develop additional parking options for personal transportation vehicles, including motorcycles, bicycles, and vehicles using new energy.

Strategy 6: Increase downtown employee use of public transit by expanding AATA service hours, developing a strong Ypsilanti/Ann Arbor transit plan, and making downtown transit stops more user‐friendly.

Strategy 7: Improve communications to downtown business owners, employees, customers and visitors by developing new communication tools and sharing information more broadly.

Strategy 8: Develop a parking and transportation strategy for downtown & near downtown residents

One of the tactics for implementing Strategy 2 is a recommendation to extend time limits on parking spots from two to three hours in certain areas.

Another tactic for implementing Strategy 2 is a recommendation to change meter enforcement hours from 8 a.m.‐6 p.m. to 9 a.m.-9 p.m. This reflects the report’s genesis as a request from the city council to the DDA, when the council was confronted with a resolution that would have extended the hours of meter enforcement. That recommendation will likely generate the most controversy, and this was reflected in public commentary at the DDA’s Wednesday meeting.

Parking Report: Public Commentary

Ray Detter, in his report to the board on the Downtown Citizens Advisory Council‘s meeting the night before, said that DDA executive director Susan Pollay had attended the meeting to give a summary of the parking report. Detter supported the idea that the DDA was the only entity equipped to administer parking operations.

Commenting on behalf of the Main Street Area Association, Tony Lupo took the podium for his allotted four minutes at the start of the board meeting. Lupo indicated that the MSAA had held information meetings and participated in the DDA’s process for receiving public feedback for the report. He reported that there was overwhelming opposition to extending the meter enforcement hours.

However, he allowed that the MSAA understood the context under which extended hours were being considered – the city’s need for revenue. What was important, Lupo said, was to couple any extension of meter enforcement hours past 6 p.m. with some kind of offsetting enhancements like increasing the maximum time to three hours – from its current limit of two hours – and offering free parking during certain hours. Lupo stated that MSAA would like to contribute to the marketing strategy for the plan.

In that context, Lupo suggested that it didn’t make sense to “shift” the time of meter enforcement from its current window of 8 a.m.-6 p.m. to 9 a.m.-9 p.m. That essentially offers a free hour of parking when it’s not in high demand. It would be better, said Lupo, to offer a free hour of parking sometime after 6 p.m. – that’s something it could be headlined as a benefit in a marketing effort. [Lupo is marketing director for Salon Vox on West Liberty Street.]

Parking Report: Transportation/Operations Committee Deliberations

At the board’s joint transportation and operations committee meeting the previous Wednesday, March 31, 2010, committee members hashed through a number of issues related to the parking report. Those ranged from presentational issues to more substantive questions.

Among the presentational issues was the question of whether to include parking rates in the body of the report or put them in an appendix. Putting actual numbers in the body of the report, suggested Newcombe Clark, would make the report immediately dated. Transportation committee chair John Mouat suggested putting the numbers in an appendix. Board chair John Splitt feared that if they did not include the numbers for rates, they would lose control of the discussion: “They’re real numbers, why not put them in there?” The rates will be included in an appendix.

Among the more substantive issues discussed at the joint committee meeting related to control of enforcement. In a section of the report describing benchmarking data from other communities, the following observation is made [emphasis added]:

Through examination of other communities, we learned the following: … Parking enforcement and parking operations are often managed jointly by one agency.

Elsewhere, the report states:

Parking enforcement and parking operations are two halves of the same parking system. Optimally, enforcement and operations strategies are planned and managed together.

In Ann Arbor, parking operations are handled by the DDA through a contract with Republic Parking. Enforcement, on the other hand, is handled by the city of Ann Arbor through police and community standards officers.

At the committee meeting, the question was raised: Why don’t we just say it – we want to take over enforcement. This is an idea that came out of the first meeting that the DDA’s “mutually beneficial” committee held last year. The DDA and the city have ad hoc “mutually beneficial” committees, charged with renegotiating the parking agreement between the two entities. At the time of that first meeting of the DDA’s committee, the city had not yet appointed a corresponding “mutually beneficial” committee.

Parking Report: Who Enforces Meters, and the City Budget Gap

The key facts about that city-DDA parking agreement were summarized during public commentary at Wednesday’s board meeting by Bob Dascola, who owns Dascola Barbers on South State Street. In 2005, the agreement between the city and the DDA was renegotiated to extend 10 years through 2015, with the annual payment by the DDA to the city in the amount of $1 million.

A provision of that agreement allows for the city to request a payment of $2 million in any given year, with the condition that the total amount over the 10-year period can’t exceed $10 million. Now five years into the contract, the city has requested $2 million each of the first five years. So, for the upcoming year, FY 2011,  the DDA does not owe the city anything under that contract.

Dascola weighed in against the idea that the DDA should voluntarily renegotiate the contract, saying that the DDA was not an ATM.

The DDA “mutually beneficial” committee’s initial discussions, which began last year, centered around the idea of an arrangement that would be more complex than the DDA simply writing an additional check to the city.

From The Chronicle’s report of the April 1, 2009 DDA board meeting [emphasis added]:

[Rene] Greff  [who chaired that committee at the time, but no longer serves on the DDA board] then ticked through what the committee had done. They had: (i) reviewed history of DDA parking agreements with the city, (ii) reviewed TIF (tax increment financing) capture, and (iii) reached a majority view – with dissent from Hewitt – that they should not re-open the discussion of the existing parking agreement. It was not the role of the DDA, Greff said, to cover gaps in the city budget. The committee had given some consideration to taking over city tax-funded activities (e.g., snow removal), and had contemplated purchasing the right to meter enforcement in downtown. The latter would allow the DDA to control a piece of the public’s experience with the downtown area.

Board member Leah Gunn asked about the city’s side of the committee. Greff explained that the city council had not yet seated their committee, and the DDA contingent had met so that they would have something more concrete to bring to the table when the first meetings with the city took place.

The two committees have not, to The Chronicle’s knowledge, ever met. Sandi Smith, who serves on the DDA’s committee, has reported at DDA board meetings for a number of months that there was nothing to report. At the last two DDA board meetings, Roger Hewitt reported only that informal talks had taken place.

The Chronicle noted in its previous coverage that the city’s committee meetings can be expected to be noticed for the public beforehand and made accessible to the public [from "City-DDA Parking Deal Possible" – which also includes a history of the respective "mutually beneficial" committees]:

If and when the two “mutually beneficial” committees from the DDA and the city council meet, it’s reasonable to expect that the meetings will be open to the public and announced in accordance with the Open Meetings Act.

While the committee membership from the city council would not amount to a quorum, a resolution passed at its Nov. 4, 1991 meeting by the Ann Arbor city council expresses the council’s will that its committees adhere, to the best of its abilities, with the requirements of the OMA:

R-642-11-91

RESOLUTION REGARDING OPEN MEETINGS FOR CITY
COMMITTEES, COMMISSIONS, BOARDS AND TASK FORCES

Whereas, The City Council desires that all meetings of City boards, task forces, commissions and committees conform to the spirit of the Open Meetings Act;

RESOLVED, That all City boards, task forces, commissions, committees and their subcommittees hold their meetings open to the public to the best of their abilities in the spirit of Section 3 of the Open Meetings Act; and

RESOLVED, That closed meetings of such bodies be held only under situations where a closed meeting would be authorized in the spirit of the Open Meetings Act.

At the DDA’s joint transportation and operations committee meeting last week, in response to the suggestion that the parking report simply state that the DDA wanted to take over meter enforcement, Susan Pollay, executive director of the DDA, said that would be “presumptuous.”

Responding to Pollay, Newcombe Clark clarified with her that the parking report was to be submitted to the city council on April 19. And the inclusion of meter enforcement by the DDA would be reasonable, Clark said, because it was within a few weeks of an expected compromise between the city and the DDA on the parking deal. Polly replied that she was not aware of a compromise.

Gary Boren then weighed in, saying it was his understanding that the city’s budget was being prepared without an assumption that the DDA would be making a $2 million payment. On the Monday following that March 31 committee meeting, the city released its budget book, which does not assume a $2 million payment from the DDA – it shows a roughly $1.5 million deficit for the year.

The issue of who has responsibility for meter enforcement is not just a matter of which agency – the city or the DDA – can insist on the right to do so. The parking report contains a number of recommendations that would seem to require either an intensely close working relationship between the agencies administering operations and enforcement, or else require that it be a single agency administering both. For example, the recommended tactics to implement Strategy 1 include the following:

• To lessen patron frustration about receiving a ticket, improve information on parking tickets & envelopes, including how to pay online or avoid a ticket in the future.
• Improve website information and provide a feedback mechanism unrelated to contesting parking tickets.
• Pursue ideas that would make it possible to pay for parking tickets and stored value meter cards in one location, providing increased convenience to customers.
• Explore making it possible to pay parking tickets at the epark machines as a way of reducing patron inconvenience and frustration.
• Explore making it possible to pay for parking tickets at banks, thus reducing the number of patrons who feel compelled to come to City Hall for this function. Determine if it is feasible for downtown banks to dispense stored value meter cards.

Counter to the original impetus behind extended hours of enforcement – an effort to generate additional revenue – is a goal of fewer tickets expressed in the report:

… parking operations and enforcement should be managed so that the number of parking tickets eventually decreases and the number of patrons complying with parking regulations increases.

Parking Report: DDA Board Deliberations

Roger Hewitt led off deliberations on the parking plan, saying that it embodies 18 years of experience by the DDA in managing parking operations. It reflected a lot of hard work and public process in a very short amount of time, he said. He noted that it had been reviewed in detail by the transportation and operations committees. The partnerships committee would do the final edit, he said, at its meeting later in the month.

Hewitt stressed that it was not just a parking plan – it’s a transportation management plan. He allowed that some of the recommendations are controversial. However, he noted that the strictly daytime economy in downtown has undergone a shift in the last 20-30 years and that there’s now a nighttime economy. The parking report contains recommendations, Hewitt said, about extended meter enforcement and geographically determined meter rates.

Newcombe Clark also praised the work of the staff. He emphasized that the DDA did not know for sure what would happen when some of the recommendations were implemented – as he put it, “when we start pulling these levers.” Clark said the DDA owed it to itself to do baseline calculations so that it could ascertain whether the demand management measures resulted in a revenue loss, a large surplus, or was simply a wash. He wanted the DDA to start looking at spreadsheets on what might happen.

John Mouat characterized the daytime parking activity in the past as essentially static, in contrast to the more dynamic pattern of nighttime parking. He said the plan itself was dynamic, not set in stone. The plan’s essence was about choices, he concluded.

Keith Orr also gave kudos to the staff, saying they’d done the work “under the gun.” Orr agreed with Clark on the need to model the various impacts of the measures when they are implemented. Responding to Lupo’s public  commentary – when Lupo  expressed some concern that the language in the report used to describe some of the enhancements was not as strong as that describing the extended enforcement – Orr said the DDA was an organization with a good history of testing plans. They’d implemented or tested everything in the Nelson\Nygaard study, he said.

Sandi Smith thanked the staff for their heroic effort. She said that in an informal survey she’d done of nighttime workers, she’d learned that a lot of people don’t realize that parking after 6 p.m. is currently free. So she was cautious about any assumption that extending meter enforcement would have a dramatic change in revenues.

Mayor John Hieftje noted that he didn’t think the document looked like it had been prepared under the gun. He said the idea of extended hours of meter enforcement would be controversial.

Leah Gunn thanked Mouat and Hewitt for chairing the combined committee meetings that worked on the parking plan. She called the plan a “tour de force.” Some things are not knowable, she allowed, but you don’t know until you try.

Outcome: The DDA parking report received the unanimous endorsement of the DDA board.

Parking Report: ParkingCarma

Related to a theme of transportation demand management was a presentation made by Rick Warner of ParkingCarma during public commentary. In discussions on the operations committee report, Leah Gunn also said she was intrigued with ParkingCarma. And Roger Hewitt said he could add ParkingCarma to the next meeting of the operations committee.

What had intrigued Gunn? Warner pitched the idea of a partnership between the DDA and ParkingCarma. He described ParkingCarma’s business, which uses a variety of technologies to make parking easier. Before the meeting, Warner described it for The Chronicle as “like Orbitz for parking.” Warner described how ParkingCarma had already inventoried all the off-street parking in Ann Arbor, and had partnered with Google Local Business Center to provide parking information to Google. That provides a way for potential customers to get information about the closest available parking locations to that business.

Warner also sketched out a way to integrate into a parking system, so that the owner of that system could accept pre-paid reservations for parking. Premiums could be collected for special events, or patrons could be directed to lower-demand spaces to optimize the parking inventory. Warner suggested that launching such a system would be best in connection with a large special event like the Ann Arbor Art Fairs.

Warner described ParkingCarma as a SPARK-incubated company. The company is listed on Ann Arbor SPARK’s website as a “portfolio company,” which refers to companies that “have navigated through the SPARK application and due diligence process and emerged with investments.” SPARK is a nonprofit organization that works on economic development for the Ann Arbor area.

Elizabeth Parkinson, vice president of marketing and communications for SPARK, told The Chronicle in a phone interview that ParkingCarma had gone through Phase I and Phase II of SPARK’s business accelerator, and had received a loan from the Michigan Pre-Seed Capital Fund, which is managed by SPARK’s Skip Simms, as well as from Automation Alley.

Granger and Christman Dispute Concrete Bid

The DDA board got an update on the progress on the underground parking garage currently under construction along Fifth Avenue on the city-owned Library Lot. The update was delivered by Pat Podges, who is vice president for southeast Michigan operations for The Christman Co., which is the construction manager for the job.

Key points of the update included the fact that earth-retention work had been completed on the east and south sides of the project and would be proceeding east to west along the north side of the site. Excavation was continuing along the east leg, near Division Street, Podges reported. A decision had been made to dewater the site by taking water up Liberty Street to South State Street, as opposed to running it to the west down toward the Allen Creek drains.

Podges reported that the result of the returned bids on the project meant that the estimate contingency in the contract would be returned in full, and the risk contingency on the project could be reduced, which resulted in $1 million that the DDA would be getting back.

Then Podges moved into a description of how the concrete package had been handled: “I just want to speak real briefly about the integrity of the process by which we used to establish the subcontractors which we are using on the job – specifically the structural concrete work package, which was the largest package on the project.”

Background on the Construction Contract

Selection of the construction manager for the underground parking garage was done in two steps. First, the job of pre-construction services was awarded. That company’s performance on pre-construction services would determine whether the DDA retained them as construction manager. The expectation was that whichever company was selected for pre-construction would ultimately be selected as construction manager.

The interviews for pre-construction services were described in part in an Aug. 13, 2009 Chronicle article. Stressed throughout the interviews was the idea that construction manager companies that could self-perform various sub-contracted aspects of the job – like pouring the substantial amount of concrete for the garage – would need to compete with other companies for that work. Describing how Barton Malow was not selected for the construction manager job, the article makes clear that Barton Malow could conceivably make money by winning the concrete portion of the job:

Still, Barton Malow and [Neal] Morton could make money on the job – if they’re selected as a concrete subcontractor. The construction manager candidates have their “in house” concrete divisions, and would ordinarily not need to subcontract out that work. But the DDA would like the construction manager for this project to bid out the concrete work. It was a question that DDA board member Leah Gunn put to the construction manager candidates during the interviews: Would they be comfortable having to compete for the concrete work with other bidders? The correct answer was yes.

The candidates for the job emphasized that the close quarters of the site made it a challenge – both logistically and in terms of minimizing impact on the immediately surrounding property. They’d be installing earth retention systems that would minimize vibration impacts, for example.

After performing to the DDA’s expectations in the pre-construction services phase of the project, Christman’s selection as construction manager of the project was finalized at the DDA board’s Nov. 4, 2009 meeting with a guaranteed maximum price of $44,381,573.

The sealed bids for the concrete work were opened on March 4, 2010 at the DDA offices. From Chronicle coverage of the DDA board’s March 3, 2010 meeting:

Bid package #3, [board chair Joan] Splitt reported, which is for the concrete and steel work, would be opened publicly at 2 p.m. in DDA offices the following day. [The bids will first be reviewed for numerical accuracy. Then any conditions specified by the contractors checked, and interviews will be held with the lowest three bidders to review the scope of work – a meeting for that is scheduled on Tues., March 9.]

The base bids were submitted as follows from lowest to highest:

1. $21,499,000  Granger Construction Company
2. $21,980,000  Colasanti Construction
3. $22,025,000  Christman Constructors, Inc.
4. $23,286,000  Spence Brothers Construction
5. $23,980,000  Barton Malow
6. $25,500,000  Walbridge

Note that Christman Constructors Inc. is a subsidiary of The Christman Co., which is the construction manager on the job. The post-bid meetings were held with the three lowest bidders, including  Christman and Granger. Granger’s team left the post-bid interview believing they’d won the job.

Pat Podges described at Wednesday’s board meeting why Granger was not awarded the concrete work. Here’s what Podges reported early in the meeting, after he updated the board on the construction progress :

I just want to speak real briefly about the integrity of the process by which we used to establish the subcontractors which we are using on the job – specifically the structural concrete work package, which was the largest package on the project. We received last month six bidders, that ranged anywhere from $21,449,000 to $25,500,000.

Based on the complexity of the project and the closeness of the second and third low bidder, we elected to bring in the three low bidders for post-bid reviews, which are widely used to determine their understanding of the project, their operational plan for the project, the schedule expectations, the quality and safety. At the end of that we disqualified the low-bidding contractor [Granger] for non-conformance with the bidding documents relative to the schedule and work plan, and also their ability to demonstrate to us their understanding of the operational execution of the work. That left the two remaining bidders, one of which was CCI, a subsidiary of the Christman Co. Each had submitted full documentation – work plan, management plan, and a detailed schedule for the project.

Further analysis of these two bids really revealed that the differential between the two firms was about 2/10 of one percent. We then looked at some other aspects of the work recommendation, including alternates that were required for them to provide as well as voluntary alternates which they offered at bid. And at the end, it was very clear that CCI had provided the best value for the project, and it was a team decision based on their final project cost, provided the best value to the city. In the end CCI’s price was $21,438,000, which was actually less than the original low-bidding contractor.

David Olson, vice president of Granger Construction, saw it differently from Podges. Speaking near the end of DDA board meeting during the time reserved for public comment, his remarks went as follows:

Hi, my name is David Olson, I’m vice president of Granger Construction. And I am here to talk briefly about integrity. As the low bidder of the concrete package on your parking ramp, I take exception to Mr. Podges’ comments about, I guess, our inexperience or lack of knowledge for that project. We’ve got a proven record of accomplishment for delivering these types of projects.

I’m here more just to make a simple public statement about a flawed process. And whether it is your process or their selection process. And make no mistake, this is not about sour grapes, this is about making a public statement about doing the right thing. We worked with these gentlemen for a long time in the same area – we play nice in the sandbox. It’s not about the gentlemen. It’s about the decision that the company made and whether it is their selection process or yours, you guys are complicit, and I just think it’s important to get this out in the public. We talk about money going back and forth – you guys are excited about $1 million that you get – if you go through that contract that’s money that is yours anyway, it’s due to be given back to you.

The process and how they made the selection of jumping from the low bidder, which we were, we won – over the second bidder to themselves, is kind of a shrewdly crafted shell game. I’m here to deliver a letter from our CEO Glenn Granger, which lays out the facts. We don’t expect to get this project, but we want to do the right thing. And doing the right thing is tough, it’s not easy being here today. It’s not about sour grapes – I was a little disarmed when we walked in and you [Leah Gunn] said, you know, ‘I know you’re here to whine about the project.’ We’re not here to whine. We’re here to get the facts on the record and to do the right thing. It’s not easy, but doing the right thing seldom is. So with that here’s a letter I would like to deliver to you, you can read it, certainly if you have any questions our contact information is there. We really appreciate your time. Thank you.

The letter delivered to the board members cited a lack of a rationale for rejecting the low-bidding company for the job. [Complete text of Granger's letter to the DDA] An excerpt:

None of Granger’s references were consulted, and there was absolutely no indication that Granger’s bid lacked a single project scope requirement. lf Christman had concerns, they had a duty to clearly document them in the meeting minutes and/or call us to communicate them. Regrettably, neither was done. The Ann Arbor DDA, and the taxpayers of Ann Arbor deserve the benefit of the lowest qualified bidder. Explaining the $526,000 difference became a shrewdly conducted shell-game, where The Christman Company extracted other savings out of the Guaranteed Maximum Price contract in order to make it appear that they’re serving your organization.

When Granger Construction interviewed for the construction manager’s role, the Ann Arbor DDA made it exceedingly clear that it desired openness, transparency and competitiveness. Unfortunately, that has not been the case.

Christman’s chief operating officer, Steve Frederickson, took the podium to respond to Olson:

Hi, I’m Steve Frederickson, president and COO of the Christman Company. I just want to be clear – I’m not sure what that letter says – but there’s been a lot of discussion that’s occurred over the past number of weeks relative to the award of the concrete package, and a lot of the discussion has been based on assumptions and conjecture and not on the facts. And so I just wanted to be really clear and really brief on what the facts are.

The facts are that in the bid documents, we described the complexity of this project. It’s underground, it’s cast-in-place concrete, you all know how hard this project is and the level of experience that is required to accomplish a feat such as that. But we were very clear in the documents about how we were going to award the project, and the criteria by which we would award the project: experience, detailed work plan, detailed schedule.

Price was part of it, but it says throughout the bid documents and in the pre-bid meeting that we had with all the bidders that it was not based exclusively on price, because we needed to know that we had a partner that was capable and qualified and knew the job, and put us in a position to be able to succeed as a partnership. The fact is, we were clear on the award criteria. Another fact is that the Granger Company was disqualified very early in the process unanimously by everybody at the post-bid [meeting], including the architect, the engineer, The Christman Company, your project management consultant [Park Avenue Consultants]. Those are the facts.

They didn’t comply with the requirements of the project, they did not display an understanding of the project to the level of comfort that we felt was necessary to be able to serve you and serve the project. Those are the facts. Their project manager had no underground parking deck experience – the full-time on-site project manager. So we were very clear on what the project was to be awarded based on. They did not meet that. So essentially what they have been asking for is a re-do of the process, and we can’t do that. It’s not fair to the other bidders to give one bidder a re-do – why wouldn’t we give the other bidders a re-do, based on what they submitted for a price? It’s unfair to the process.

We have challenged the integrity of the process, with our partners – with the architect, with the engineer, your project manager, with the DDA – and everybody has established hands down that the integrity of the process was maintained throughout the entire process. So we’re confident in that. And we’ve made those details available, and if you look at the details it’s very clear. So I just encourage you to look at facts, and take all of the emotion out of it, and look at the facts and the people that are best qualified to do the job. We’re in a great position to be giving that money back at this point, in moving forward through the project. Everybody’s excited to do it, we’ve got a great team, and we’re out there getting after it as you can see. Thank you.

Dennis Carignan, Granger’s director of pre-construction services, then took the podium:

I really don’t want to belabor this again – Steve [Frederickson] mentioned getting the facts out there. I would encourage you to do that, I would encourage you to look into the facts. You know, he mentioned not being qualified, and I can say personally I’ve been involved in two different parking ramp projects with Granger and we’ve done a dozen throughout the state and we’ve had huge success. And you guys know that – because we were short-listed to do the entire project [the construction manager job].

He also said, you know, that we weren’t compliant with the bid documents. And actually you can take a look at the post-bid interview, and we are compliant – there’s yeses all the way down. And it was kind of a shock to us to find out weeks later that they were going to bypass us. I’m glad to hear that you are saving money. In this economy, that is a big deal. And I think you could be saving more. I think there were some irregularities in the bidding process, that maybe you could have capitalized on some additional savings.

It was an extremely short bid period, you know. Maybe that was a way of ensuring that Christman could get the work. Voluntary alternates were prohibited, and I have never seen that in a set of bid documents. Now, to me, why wouldn’t you want to encourage some ingenuity and get some cost savings there? In fact, we’ve got $300,000 worth of savings to the job that we couldn’t submit on. And I’m happy to share that with you, too. To help the project maybe save more money. Aside from that, you know, I don’t expect anything to change. Again we just want to encourage the facts to come out.

The document referred to by Carignan with all the yeses checked is the post-bid conference summary, which is signed by representatives of Granger and Christman. In addition to the check boxes, the summary contains additional handwritten notations in free response fields. [.pdf of post-bid interview summary]

The language of the contract between Christman and the DDA supports Olson’s contention that the $1 million being returned by Christman to the DDA is contractually required [.pdf of complete contract]:

Upon Substantial Completion of the Project, any unused portion of the GMP [guaranteed maximum price] Estimate Contingency shall be returned to Owner [DDA] for use by Owner as determined by Owner in its sole discretion. Upon the release or return of any portion of the GMP Estimate Contingency to the Owner, the GMP shall be reduced by the amount returned or otherwise released to Owner from said fund.

The contract also specifies that Christman is paid only based on documented invoices for work actually performed – up to the guaranteed maximum price.

In a telephone interview, we asked Podges if he could provide some additional clarity  about the reason that Granger’s bid was rejected after the post-bid conference. Podges said it was not a question of Granger’s general qualifications to do concrete work for parking decks. Rather, it was Granger’s readiness – as reflected in the bid documents and the post-bid conference – to handle the detailed complexity of this specific underground project, with the associated logistical challenges of a tight urban construction site with little or no staging areas for materials.

Podges told The Chronicle that precisely because Granger is known as a competent firm, Christman was disappointed that Granger did not present the kind of detailed scheduling with specific construction activities and an operational plan necessary to give Christman the comfort level they need to award the job to them. Asked to give a specific example, Podges described how the timing of the form-pour sequence for shear walls – walls interior to the structure – was crucial. But when asked for their thoughts on how they’d approach that, Podges said, Granger didn’t provide a detailed answer.

A lot of what Christman knows about building underground parking structures, Podges said, stems from their recent experience on the Michigan Street Development Project in Grand Rapids. Podges said that meant his firm had expertise and experience that allowed them to understand the challenges in more detail than others. The Michigan Street Development Project was a key part of Christman’s presentation to the DDA board when they interviewed for the construction manager job. [Chronicle coverage: "DDA Hires Christman, Bonds Delivered"]

Perspective on Self-Performed Work

Two factors may have led observers of the bidding process to the erroneous conclusion that the concrete work for the DDA’s parking structure was required to go to the lowest bidder. First, the questioning during the construction manager interviews held by the DDA emphasized that the construction manager’s in-house divisions would have to compete with other bidders. Second, the public opening of the sealed bids is often associated with a low-bid requirement.

Christman’s contract, however, specifies a guaranteed maximum price. That’s an arrangement that requires Christman to accept a certain amount of risk – if the cost is more than the maximum, it comes out of Christman’s pocket. In such an arrangement, the final determination of subcontractor selection belongs to Christman.

DDA staff capability does not extend to providing direct oversight of Christman’s selection process for subcontractors – that’s something for which the DDA relies on its construction consultant, Park Avenue Consultants, and the architect on the project, Luckenbach Ziegelman Architects.

In the course of recent reporting on the Humane Society shelter construction project, for which Washtenaw County is providing a certain level of oversight, The Chronicle met Bob Martel, who’s playing the role of construction manager for the shelter project, which is essentially now complete. Martel’s specific expertise is as an owner’s representative for development of medical office building projects in the $15 million to $30 million price range.

So we asked Martel for his thoughts on the general idea of arrangements in which a construction manager has the option of self-performing the work. In a phone interview, Martel said that he favored a practice specifying that a company performing as construction manager for a job could not self-perform any of the subcontracted work.

His rationale behind that, explained Martel, was to remove any possible perception that the construction manager’s in-house division might have an inside track, which could dissuade other companies from bidding. That could lead to a situation where the owner’s price wasn’t as low as it could be.

But Martel allowed that his own approach was not the most common practice. He also added that he’d hired Christman for a couple of projects – they’d done great work, he said.

DDA Board View on the Concrete Bids

At the very end of the board meeting after representatives from Granger and from Christman had all weighed in, John Splitt addressed the issue this way:

I just want to say at this point that as chair of the capital improvements committee and as chair of this board I am satisfied with the integrity of the process that went on. And I think that the committee all agrees that the process was fair.

Misc. Items Discussed by the DDA Board

There were a range of other topics mentioned at Wednesday’s meeting.

Main Street BIZ

In other public commentary before the board, Ed Shaffran appeared in order to thank the board for their support in the establishment of the Main Street Business Improvement Zone. Ellie Serras had been listed on the agenda to speak on behalf of the BIZ, so when Shaffran took the podium, he joked that he figured they’d prefer to hear from Serras, which was met with an enthusiastically lighthearted “Yes, we would!” from Leah Gunn and Russ Collins.

The DDA had provided $83,270 to support the creation of a business improvement zone (BIZ) on South Main Street.

Sandwich Board Signs

At the city council’s Feb. 16, 2010 meeting, a revision to the city sign ordinance was unanimously defeated – it would have legalized the common practice of using sandwich board signs on downtown sidewalks. The measure also did not enjoy the support of its sponsor, Sabra Briere (Ward 1), who had worked with a task force established in October 2009 to address the issue.

At the February meeting, it was indicated that the city attorney was recommending that the ordinance be enforced. Warnings have been issued but no confirmed citations have been made. There is some sentiment among merchants that the sandwich board signs could be subsumed under the sidewalk occupancy ordinance.

At Wednesday’s board meeting, Keith Orr gave his colleagues a rundown of the history of the issue. Newcombe Clark emphasized that it was crucial for non-first-floor businesses to get the added exposure that could be gained from sandwich board signs.

Before the DDA board was a resolution calling the city council to take action at its next meeting, on April 19, 2010, to legalize sandwich board signs.

Outcome: The DDA board unanimously passed the resolution that called on the city council to revise the ordinance in a way to make sandwich boards legal downtown.

East West Rail

During public commentary at the conclusion of the meeting, local developer Peter Allen said he was troubled to learn from reading the minutes of the DDA board’s retreat that the east-west rail project had been put on hold. He said he felt like the DDA could play a role by stepping up and being a leader on the issue, by standing up and shouting, “It has to get done.” He also pointed to the University of Michigan as an organization that stood a lot to lose, if the project didn’t move forward.

Mayor John Hieftje responded to Allen’s remarks by saying that there was still a whole lot going on and that the recent setback had to do with the failure to win stimulus funds to address siding issues near Detroit. When that was worked out, he said, the project would be back full-bore. He noted that rail cars are being purchased, so the project is still going forward.

Hieftje also said that conversations with Dearborn were happening and that there was some possibility of exploring a connection that would include Dearborn and the airport, but that would not go all the way to Detroit initially. He pointed to the $30 million of stimulus funding that Dearborn had been awarded in order to build a new station.

Commuter Challenge: getDowntown

Nancy Shore, director of the getDowntown program, reported to the board that the commuter challenge, which takes place in May every year, could use support from their participation. Just one sustainable commute, she told them, would earn a free ice cream from Washtenaw Dairy. The Bike to Work Day event for this year will fall on May 21.

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

Absent: Jennifer S. Hall

Next board meeting: Noon on Wednesday, May 5, 2010 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]