The increase, which was recommended by the board’s executive committee, takes effect as of July 1, 2014. Before going into closed session, board member Keith Orr noted that the review was being conducted in closed session at Pollay’s request.

In describing the rational for the raise, Roger Hewitt noted that in 8 of the past 10 years, Pollay received no raise because of the difficult economy. Her position as a city employee is in the Level 2 category, which has a salary range from $95,000 to $157,000. Several board members indicated a desire to move Pollay toward the midpoint of that range over the next few years. Sandi Smith characterized it as “catch up” to compensate for the years when Pollay didn’t get a raise.

Casting the sole vote against the 5% increase was city administrator Steve Powers, who said he’d be more comfortable with a 3% raise, and hoped there would be a more robust evaluation process in the future.

The resolution regarding the increase states that “a number of important DDA projects were undertaken in FY 2014 under Ms. Pollay’s leadership, including opening the new First and Washington parking structure, creating a Street Framework planning initiative in partnership with the City, and working with the City Council to approve amendments to the DDA ordinance.”

The resolution also states that board members provided reviews of Pollay’s work in FY 2014, and the reviews “noted how effectively she works with the DDA Board to support board member involvement and effectiveness, how effectively DDA programs and projects are managed, and that Ms. Pollay serves as a vital resource for downtown stakeholders, and the community at large…”

Pollay has served as the DDA’s executive director since 1996.

This brief was filed from the DDA offices, 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings.

The state enabling statute allows for either the mayor or the city administrator to serve on the board of a DDA. Mayor John Hieftje has served that role for his 13-year tenure as mayor.

However, discussion had occurred throughout the council’s recent consideration of the city’s DDA ordinance about the possibility of appointing the city administrator instead of Hieftje to serve in the statutory slot on the DDA board. Hieftje has announced that he’s not seeking re-election as mayor in 2014.

Even though the issue was not discussed explicitly by the council at its Dec. 2 meeting, in the document the council approved for its routine annual committee assignments, Powers’ name was indicated as the DDA board appointment. [For additional background on that appointment to the DDA board, see: "Column: Connecting Dots – DDA, FOIA."] [.pdf of all assignments]

Left to right: Ann Arbor mayor John Hieftje and Ann Arbor downtown development authority board members Leah Gunn and Nader Nassif. (Photos by the writer.)

The difference will be covered from the existing fund balance. The use of fund balance, in the current year and in the coming year, was planned as part of the construction of a new underground parking structure on South Fifth Avenue, and a new contract with the city of Ann Arbor, ratified in May of 2011. The contract, under which the DDA manages the city’s public parking system, pays the city of Ann Arbor 17% of gross revenues from the parking system.

At the end of FY 2013, the DDA expects to have a total fund balance of $4.38 million, or an amount equal to about 18.2% of expenses.

In its other main business item, the board authorized a budget of $100,000 for its Connecting William Street project, which it’s undertaking at the direction of the Ann Arbor city council. The council passed a resolution on April 4, 2011 that gave the DDA direction to explore alternative uses of city-owned parcels – currently used for surface parking – in a limited area of downtown. The area is bounded by Ashley, Division, Liberty and William streets.

Parcels included in the area are: the Kline’s lot (on Ashley, north of William), Palio’s lot (at Main & William), the ground floor of the Fourth & William parking structure, the old Y lot (Fifth & William), and the top of the Fifth Avenue underground parking garage, which is nearing completion.

Of the budgeted amount, $65,000 will come from a community challenge grant awarded recently as part of a larger $3 million grant awarded to Washtenaw County by the U.S. Dept. of Housing and Urban Development. The remaining $35,000 will be made up by DDA cash (no more than $20,000) and DDA in-kind contributions of staff time.

Toward the end of Wednesday’s meeting, the board also entertained some discussion about parking meter bags. The bags placed over on-street parking meters to designate the spots as unusable, so that streets are free of parked cars for construction projects or special events. The meter bag discussion came in the context of a request on behalf of FestiFools and conveyed by mayor John Hieftje, who sits on the DDA board. The request was to waive fees ordinarily associated with the meter bag placement for the April 1 FestiFools parade in downtown Ann Arbor.

One possible approach includes the creation of a parking meter puppet.

FY 2013 Budget

At its March 7 meeting, the board was asked to approve its fiscal year 2013 budget. Across all funds, the budget shows anticipated expenses revenues of $22,097,956 against $24,101,692 in expenditures – for an excess of expenditures over revenues of $2,003,736. The difference will be covered from the existing fund balance.

The shortfall was planned. It’s in the context of construction of a new underground parking structure on South Fifth Avenue, and a new contract with the city of Ann Arbor, ratified in May of 2011, under which the DDA manages the city’s public parking system. That contract pays the city of Ann Arbor 17% of gross revenues from the parking system, which are budgeted in FY 2103 at $18.1 million. The 17% translates to a ballpark figure of $3 million.

Factoring in coverage of this year’s (FY 2012) use of fund balance and FY 2013′s planned use of $2 million, the DDA will have a total fund balance of $4.38 million at the end of FY 2013, or an amount equal to about 18.2% of expenses. [.pdf of FY 2013 budget]

FY 2013 Budget: Deliberations

John Splitt reviewed the budget for the board, relying on the combined fund summary. [.pdf of FY 2013 DDA budget documents]

By way of background, the DDA’s accounting system includes four funds: the TIF (tax increment finance) fund, the housing fund, the parking fund and the parking maintenance fund. The TIF fund receives revenue from the taxes that are “captured” in the tax increment finance district defined in downtown Ann Arbor. The DDA receives taxes on the increment between the baseline value of property and the value of property after new construction. The DDA does not capture increases in value due to inflation. The housing fund receives revenue through transfers from the TIF fund.

The parking fund receives revenues from Ann Arbor’s public parking system, which the DDA manages under contract with the city. The contract, which was renewed in May 2011, calls for the city of Ann Arbor to receive 17% of gross parking revenues. The DDA contracts for day-to-day operations of the parking system with Republic Parking. The parking maintenance fund receives revenue through transfers from the parking fund.

Highlights of Splitt’s budget review included TIF income of $3,957,012. On the expense side, salaries and fringe benefits paid out of the TIF fund are basically split evenly, he explained, between the TIF and parking funds. That comes to roughly $152,000 for salaries and $95,000 for fringe benefits from each fund. [The DDA has four full-time employees– an executive director, a deputy director, a planning and research specialist, and a management assistant.]

Administrative expenses – $157,119 for the TIF fund and $90,292 for the parking fund – were described by Splitt as all the “office costs.” The professional services of $155,000 for the TIF fund and $85,500 for the parking fund will pay for architects, attorneys and consultants. Holiday lights and sidewalk repairs are budgeted for $130,000 of the TIF fund – it’s something the DDA does every year, Splitt noted. Another TIF fund line item is $508,000, which is an annual amount that the DDA pays toward the bond payments for the city of Ann Arbor’s new police/court building. The budget also includes $100,000 for the DDA’s energy grant program.

Another TIF fund line item for $200,000 – labeled “capital costs” – was described by Splitt as including sidewalk ramp installation for compliance with the Americans with Disabilities Act (ADA). Of the $3,081,896 in bond payments to be made out of the TIF fund, $2.25 million is for the new underground parking garage on South Fifth Avenue, due for completion sometime this spring.

For the housing fund, Splitt highlighted the two $400,000 line items (for a total of $800,000) that would be spent on Avalon Housing’s Near North project on North Main Street, and Village Green’s City Apartments project at First and Washington. In addition to support for the affordable housing units that are part of the City Apartments project, the DDA is financing the construction of the first two floors of the development, which will contain a public parking deck. The deck will be owned by the city of Ann Arbor.

Splitt said he didn’t know how likely it would be that those grants would need to be paid during the FY 2013 year, but it’s not impossible, he said, so the items are being included in the budget. [Neither project has begun construction, but the City Apartments project is poised to begin, with construction equipment on site.]

For the parking fund, the revenue estimate for FY 2013 is $18,104,916. That’s based on essentially flat growth but some additional usage, Splitt said – perhaps 1/4 or 1/3 usage of the new underground parking garage, set to open this spring. There will also be a parking rate increase set to take effect in September, he said, so the budget factors in 10 months worth of that rate increase. He characterized it as a “reasonable and conservative” estimate.

Out of parking revenue, it’s anticipated that the contract with Republic Parking will cost $6,298,423. The 17% of gross to be paid to the city of Ann Arbor is estimated to be $3,139,795. Also paid out of the parking fund is a $500,000 transfer to the parking maintenance fund and $590,060 to support alternative transportation in the form of the go!pass program.

A capital cost for the parking fund of $1,588,235 was described as a downpayment for parking at the First and Washington development. Bond payments from the parking fund total $3,613,759 across all the various parking structures, Splitt said. Of that amount, $700,000 is for the First and Washington structure. It’s not clear whether that amount will need to be paid in this budget year, he said.

For the parking maintenance fund, Splitt pointed to the $1,696,350 estimated expense, an amount derived from an estimate of the DDA’s parking structure engineering consultant, Carl Walker. The structures are in such outstanding condition, Splitt said, that it’s not anticipated that all the money would be spent, but it would be budgeted nonetheless.

Summarizing across all funds, Splitt said, the DDA is spending roughly $2 million more than its anticipated revenues. Estimated balances for each of the funds at the end of the year are: TIF – $2.9 million; housing – $0.3 million; parking – $0.735 million; and parking maintenance – $0.465 million. That leaves a total fund balance of $4.387 million at the end of FY 2013, Splitt concluded.

Russ Collins commented that FY 2013 is the “nadir” of the projected financial picture. He was alluding to the fact that the DDA anticipated tight budgets for a certain period, in the wake of the new parking garage construction and the new parking contract with the city of Ann Arbor, but after that the DDA would be in less of a financial crunch.

Sandi Smith sought some clarification of the arithmetic for the fund balances – the numbers included in the budget sheet show existing fund balances from June 30, 2011, but did not show the use of fund balance for the current fiscal year, FY 2012.

Newcombe Clark noted that there are conservative “hedges” built into the budget – the need to pay out $800,000 from the housing fund and the estimate of usage for the new parking deck. He wanted to know if the operations committee had thoughts about how to proceed if the scenarios underlying those hedges did not materialize in a year or so. Would the advice be to pursue additional projects or to let that accumulate to the fund balance? Splitt indicated that he felt it would be better to hold on to the reserves at this point, until the DDA is very comfortable with its reserve level.

Mayor John Hieftje asked if the forecasted TIF revenues included new projects that were anticipated being built within the DDA district, which would increase the amount of tax captured by the DDA. Joe Morehouse, deputy director of the DDA, explained that the DDA uses a standard 2% increase per year projection for forecasting. Once taxes begin to be captured after a project is complete, they’re added in to the total.

Hieftje said he felt it’s important to say that the use of fund balance that the DDA is making this year has been planned for a long time. Splitt concurred, saying that the money the DDA is using from its reserves is what it expected to use.

Outcome: The DDA board voted unanimously to approve its FY 2013 budget.

Downtown Parcel Planning Budget

The board was asked to establish a budget of $100,000 for its Connecting William Street project, which it’s undertaking at the direction of the Ann Arbor city council.

Downtown Parcel Planning: Background

The council passed a resolution on April 4, 2011 that gave the DDA direction to explore alternative uses of city-owned parcels – currently used for surface parking – in a limited area of downtown. The area is bounded by Ashley, Division, Liberty and William streets.

Parcels included in the area are: the Kline’s lot (on Ashley, north of William), Palio’s lot (Main & William), the ground floor of the Fourth & William parking structure, the old Y lot (Fifth & William), and the top of the South Fifth Avenue underground parking garage, which is nearing completion.

Of the budgeted amount, $65,000 will come from a community challenge grant awarded recently as part of a larger $3 million grant awarded to Washtenaw County by the U.S. Dept. of Housing and Urban Development. The remaining $35,000 will be made up by DDA cash (no more than $20,000) and DDA in-kind contributions of staff time.

The committee that has been shepherding the project along since the summer of 2011 recently released an online survey to solicit initial community feedback.

Downtown Parcel Planning: Deliberations

Joan Lowenstein reported on the Connecting William Street project, saying it’s pretty much on schedule. The survey has 1,500 responses so far. With the passage of the resolution, the project could move to its next phrase, to look at the land use and economics.

Newcombe Clark wanted to know if the $100,000 figure was matched to proposals from consultants. He was concerned that when the $100,000 figure is put out there, suddenly the cost of consulting becomes $100,000. Lowenstein indicated that the consultant had been selected already. [The consultant identified is SmithGroupJJR.] She noted that the DDA cash amount is “not to exceed” $20,000.

Amber Miller, planning and research specialist with the DDA, explained that the project budget was the same one used in the application that the DDA had made in coordination with Washtenaw County for a community challenge grant awarded by the U.S. Dept. of Housing and Urban Development.

Clark noted that the resolution the board was being asked to consider authorized negotiation of the consultant contract at the committee chair level:

RESOLVED, The DDA Partnerships/Economic Development Committee Chairs are authorized to negotiate and approve contracts relating to this project including a grant contract with the County and the selection of consultants as needed.

Clark wanted to know if the consulting contract had been signed – no, he was told. Clark offered a “friendly set of eyes” to look at the contract before it’s signed, which seemed amenable to Lowenstein and other board members.

Earlier in the meeting, during his report from the Downtown Citizens Advisory Council, Ray Detter said that the CAC always respects and supports careful community planning. So at the CAC meeting the previous evening, he reported that members had participated in the Connecting William Street survey. The CAC had been joined by Skyline High School students who were satisfying a course requirement – in connection with the survey, they’d made a plea for more stuff for young people in the downtown.

Outcome: The board voted unanimously to approve the Connecting William Street project budget.

Parking

Parking is common topic for every DDA board meeting, even if there is no board business requiring a vote on it.

Parking: Monthly Numbers

In Roger Hewitt’s absence, John Splitt gave commentary on monthly parking numbers. Comparing January 2012 to January 2011, Splitt noted that revenue-wise it was a good month this year – up 17% [$1,358,935 in January 2012 compared to January 2011 at $1,161,632]. Splitt attributed the change to a rate increase and outstanding weather. He hoped for the same kind of results for February.

Not discussed by the board was the performance of the parking system measured by the number of hourly patrons – it was also up compared to a year ago. In January 2011 the parking system had 169,653 hourly patrons, compared to 179,037 this year, an increase of about 5.5%. Systemwide there were about the same number of spaces available, 6,918 in January 2011 compared to 6,895 in January 2012. [.pdf of January 2012 monthly parking report]

Ann Arbor public parking system hourly patrons. (Image links to larger file.)

Ann Arbor public parking system revenues. (Image links to larger file.)

Parking: Underground Garage Construction Update

Splitt said his report on the new underground parking garage would be much like it had been for the last two months, because it’s winter. Work is being done inside the deck on mechanical systems and lighting. Walls are being poured, he said, inside the structure. He expected that wall pours would be done at the end of March. They’re shooting to get South Fifth Avenue re-opened by the end of May, but hopefully it will be open before that, he said.

Newcombe Clark asked if there might be staging potential for the art fair (July 18-21) on top of the deck? Splitt said that if work stays on schedule, the surface work might be complete by the time of the art fairs. He also indicated that the garage might be opened in phases, with the first couple of levels opened before the lower levels.

During his report from the Downtown Citizens Advisory Council, Ray Detter said he’d visited the lower floors of the new underground parking garage under construction, and it could only be described as “awesome.”

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: FestiFools – Parking Meter Puppet?

At the end of the meeting, during the time for other DDA business, mayor John Hieftje told the board that FestiFools is facing a dilemma. [Festifools is an annual street festival in downtown Ann Arbor – this year held on Sunday, April 1 – involving very large puppets. The event has expanded to include FoolMoon, a procession of luminaries, which takes place this year on Friday, March 30. Workshops to create luminaries are being held every Sunday in March from 10 a.m. to 5 p.m. at the Workantile (118 S. Main Street).]

Hieftje described the event as an innovative, quirky and fun project and they were hoping that the DDA could waive a $1,000 parking meter bag fee associated with closing streets.

Susan Pollay, executive director of the DDA, was asked for clarification of the meter bag fees. [The fee per meter was raised from $15 to $20 effective Feb. 1, 2012.] She explained that the parking rate increases authorized in January 2012 also made other changes to meter bag fees. Now, what’s required is a reimbursement of actual costs incurred (from Republic Parking) to place the meter bags on Sundays and holidays. After the meeting, Pollay told The Chronicle that Republic Parking’s labor contract with its workers requires a minimum call-out time of four hours.

From the set of parking policy changes authorized by the DDA board in January 2012, for February implementation:

Meter bag requests for Sundays and Holidays will incur a fee for meter bag installation fee of $160 for up to 100 bags and $320 for more than 100 bags.

What’s different this year compared to last year, Pollay told Hieftje, is the reimbursement of actual costs on Sundays and holidays – FestiFools falls on a Sunday. Hieftje asked that one of the DDA board committees talk about waiving the fee.

Keith Orr commented that often when the DDA does nice things, it doesn’t get recognition for that. He suggested that the Sunday actual cost fee be waived in exchange for FestiFools creating a parking meter puppet, or a meter-bag puppet.

DDA board member Keith Orr suggested that the DDA's fee waiver for FestiFools be tied to the creation of a parking meter puppet.

Sandi Smith weighed in on the importance of not doing something retroactively – it needs to be addressed now. She allowed that FestiFools is a great event. But she noted that there are more and more events downtown, and she noted that the DDA would get similar requests from other organizations. She pointed out that there’s a community events fund, which the city of Ann Arbor administers. It sounds simple and like a no-brainer to waive the fee for FestiFools, she said, but she had concerns about making a judgment for one event and not another.

Newcombe Clark followed up on Smith’s point by noting that the board heard a lot of “You’re not doing enough!” but this would create another opportunity for people to say, “Why not me?” He weighed in against waiving the fee in the absence of a policy.

Leah Gunn made a formal motion, which she would subsequently withdraw, that the DDA waive the $320 Sunday fee in exchange for a puppet in the parade. Hieftje said he supported that motion, but would like to go further than just the $320 and to waive all the meter bag fees, saying that the event is still really just getting started. He said the issue had come up quickly and caught FestiFools by surprise.

Clark suggested that it would be a better approach for now to have Pollay handle it within her discretion as executive director. John Mouat also indicated he was concerned about any approach that sets precedent for piecemeal solutions. Gunn was amenable to having Pollay handle the issue and withdrew her motion. Russ Collins weighed in supporting that approach, saying he would have suggested simply amending Gunn’s motion to provide direction to Pollay to handle the issue administratively.

Comm/Comm: LED Lights

Ted Williams and Jaspreet Sawhney of Falcon Innovations Inc. both attended the March 7 meeting, although it was Williams who gave a presentation to the board during public commentary.

Ted Williams of Falcon Innovations Inc. showed the DDA board an example of the kind of LED light bars his company manufactures.

The pair had previously paid the board a visit back on July 6, 2011 to introduce board members to their company’s LED lighting technology, which is sold under the brand name BLUECOLT. Williams showed them an LED light bar, which he described as revolutionizing lighting for many different applications. He showed the board slides of interior lighting applications, and illuminated exterior signs including some for Domino’s Pizza and the University of Michigan block M (at Glick Field House).

The main idea that Williams wanted to get across to the board regarded potential applications to lighting in parking structures. In most typical parking structure lighting applications, Williams explained, the light is up in the rafters and bounces around, which wastes energy – because the light is trapped there, and it’s not near the surface that needs to be lit.

Another issue specific to parking structures, Williams explained, is that typically large chunks of light are spaced out every 30 feet or so – that can cause alternating dark spots and glare for drivers. The concept that Williams showed the board would use light bars mounted under the beams of the parking structure, which would use “little bits of light spread out evenly.”

From a slide presented by Falcon Industries Inc. to the DDA board, illustrating an under-beam placement of LED light bars in a parking structure.

Williams told the board he’d be attending the third in the series of sustainability forums to be held at the downtown location of the Ann Arbor District Library, starting at 7 p.m. on March 8. The forum will cover Ann Arbor’s climate action plan, climate impacts, renewable and alternative energy, energy efficiency and conservation.

After Williams’ presentation, board member Newcombe Clark asked Williams if he’d been in touch with DDA executive director Susan Pollay. Williams indicated that he’d been in touch, partly as a result of the previous visit to the board.

Mayor John Hieftje wanted to know if the LED lights manufactured by Falcon could be dimmed – yes, he was told.

Comm/Comm: 1320 S. University

During his report from the Downtown Citizens Advisory Council, Ray Detter said he was pleased that the planning department and the planning commission had recommended denial [on Feb. 7, 2012] of the owner’s request to rezone the property at 1320 S. University from D2 to D1. However, he continued, he was disappointed that the owners of the property have nevertheless submitted a proposal to the city council that the property be rezoned. Detter described that upcoming vote [probably in April] as a test for the city council.

Comm/Comm: DishFish

Joel Verdun addressed the board during public commentary at the conclusion of the meeting, pitching DishFish, which he described as a fundraising coupon and community currency. The free coupons cost businesses no money, he said, and the coupons go back into circulation. He said he’d like to work with the DDA’s economic development and partnership committee to put the DDA logo on the coupons.

Present: Nader Nassif, Newcombe Clark, Bob Guenzel, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Roger Hewitt.

Next board meeting: Noon on Wednesday, April 4, 2012, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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

Ann Arbor city council chambers on Aug. 15, 2011. Despite appearances, the city of Ann Arbor does not currently have a balloon payment due that will put the city up against its debt ceiling. (Photo by the writer).

The city council originally gave its approval to the selection of Village Green as the purchaser of the city-owned First and Washington lot back in 2006. To make up for the fact that the First and Washington deal has not yet been finalized, on Monday the council approved a $3 million inter-fund loan from its pooled investment fund. The money is needed to pay construction bills for the city’s new municipal center.

A year earlier, in 2005, the city received a recommendation from a blue-ribbon task force to change the composition of the board of trustees for its retirement system – to a mix on the board that is less heavily weighted towards members who are beneficiaries of the system. And on Monday, the council approved the Nov. 8 ballot language that will ask voters to change the city charter, which specifies the composition of the board.

A year before that, in 2004, the city council gave direction to city staff to develop an ordinance that would regulate idling vehicles. On Monday, the city council formally received – but took no action on – a resolution from its environmental commission recommending a draft anti-idling ordinance.

Likely dating back even earlier was an agenda item that addresses a point of ongoing friction between the city and the University of Michigan: reimbursement for the costs associated with traffic control during home football games. On Monday, the council approved a resolution that sets Aug. 25 as a deadline for completing a contract that reimburses the city for those costs. Otherwise, the city administrator is directed not to provide the signs and signals operations during home games.

In other business, the council gave final approval to the reapportionment of the five city wards, which will take effect after the Nov. 8 election. The council also set the application fee for medical marijuana business licenses at $600. The city’s medical marijuana licensing legislation, approved in June, takes effect later this month. Mayor John Hieftje also announced nominations for four of the five slots on the newly-established medical marijuana licensing board.

The mayor also announced nominations to the Ann Arbor Downtown Development Authority board. Joan Lowenstein and John Mouat were nominated for reappointment, while Gary Boren, recently elected as chair of the board for the coming year, was not.

At the meeting, the DDA was also highlighted during public commentary by the owner of Jerusalem Garden, a restaurant adjacent to the construction site of the Fifth Avenue underground parking structure, which the DDA is managing. The restaurant has seen revenues drop during construction. He reiterated some of the points he’s made previously when addressing the council and the DDA board, and this time called on the council to think about how to apply lessons learned from the current situation in the future.

Economic development was also part of the council meeting in the form of a resolution the council passed that urges the Washtenaw County board of commissioners to levy a tax to fund economic development. The tax is based on Act 88 of 1913 and does not require voter approval.

The proposed Fuller Road Station maintained a presence during council proceedings in the form of public commentary, as well as a reminder from the council to the mayor that he’d previously indicated a council work session would be scheduled on the project.

Inter-fund Loan for Municipal Building

The council was asked to approve the temporary loan of $3 million from its pooled investment fund (Fund 0099) to the building fund for its new municipal center (Fund 0008), which is nearing completion. The municipal center is located at Fifth and Huron.

Inter-fund Loan: Background

The loan is needed because the sale of the city-owned First and Washington property to Village Green for its City Apartments development has not yet been finalized.

As a historical point, the city council approved the selection of Village Green as the buyer of the First and Washington property at its Aug. 10, 2006 meeting. On that occasion, Stephen Rapundalo (Ward 2) cast the sole dissenting vote.

The new municipal center’s financing plan included $3 million in proceeds from that sale. The loan from the city’s pooled investment fund will allow the construction bills to be paid.

The city’s pooled investment fund includes all eligible cash across all city funds – interest earned on the pooled funds is apportioned back to each fund based on the relative amount of cash from that fund in the pool.

The building fund will incur a cost of 1.93% annual interest on the money lent from the investment pool. According to the staff memo accompanying the resolution, on a short-term basis the inter-fund lending approach is more desirable than borrowing money from a lending institution, because of lower transaction costs, lower interest rates and no prepayment penalties.

The short-term financing strategy of lending the building fund $3 million from the pooled investment fund will not have an impact on the city’s general fund, if the land sale is finalized. However, the short-term financing strategy does not eliminate the risk to the general fund, if the land sale does not go through.

The city bonded for about $47 million for the municipal building project. The yearly bond payments of $1.85 million can be broken down roughly as follows: $508,000 in TIF (tax increment finance) capture pledged by the Ann Arbor Downtown Development Authority; $490,000 in revenue from antenna rights; $455,000 in elimination of leases for space at other locations; $175,000 in elimination of utilities for leased space; $225,000 pledged by the 15th District Court facility fund.

The council had been advised by interim city administrator and chief financial officer Tom Crawford at its Aug. 4, 2011 meeting to expect some kind of short-term financing proposal on the Aug. 15 agenda. And more than a year earlier, at a city council work session in April 2010, the council discussed the city’s contingency plan of taking out short-term financing in the event the land sale did not materialize.

With respect to the land sale, at its Aug. 4 meeting, the council extended a purchase option agreement with the developer Village Green for the First and Washington site, where the developer plans to build Ann Arbor City Apartments. It’s a 9-story, 99-foot-tall building with 156 dwelling units, which includes a 244-space parking deck on its first two stories.

The land deal was originally set at $3.3 million, but was reduced by the council at its June 6, 2011 meeting to $3.2 million. The reduction in price approved at the council’s June 6 meeting was based on a “bathtub design” for the foundation that is intended to prevent water from ever entering the parking structure, eliminating the need for pumping water out into the city’s stormwater system. However, the Aug. 4 purchase option extension came with a charge by the city to Village Green of $50,000.

The parking deck portion of Village Green’s City Apartments project is being developed in cooperation with the Ann Arbor DDA, which has pledged to make payments on around $9 million worth of bonds for the project, after the structure is completed and has been issued a permit for occupancy.

According to the staff memo accompanying the Aug. 4 resolution, Village Green still hopes to break ground on the project in the 2011 construction season.

As a historical point related to the planned use of the sale proceeds for the new municipal center construction, the council defeated a resolution on March 17, 2008 to extend the Village Green purchase option agreement for First and Washington. At the council’s following meeting, on April 7, 2008, the measure was brought back for reconsideration, and the council voted unanimously to extend the agreement. The key difference was the addition of a “resolved clause,” which stated: “Resolved, that the proceeds from this sale shall be designated to the general fund, Fund 010.”

Inter-fund Loan: Council Deliberations

Mike Anglin (Ward 5) confirmed with the city’s chief financial officer and interim city administrator Tom Crawford that the $3 million loan transfer was part of the municipal center construction cost. Anglin asked why the city would not simply look to the general fund itself to cover the cost. Crawford explained that approach would result in a lower investable fund balance in the general fund, which would be a detriment to the general fund.

The financing the city is proposing, Crawford said, is structured so as not to be a detriment to the general fund. It’s the building project fund that pays the interest, he said. Sabra Briere (Ward 1) characterized the financing essentially as establishing a line of credit. Crawford confirmed that the investment pool is reinvested and reevaluated on a daily basis.

Outcome: The city council voted unanimously to approve the inter-fund loan to the municipal center building fund from the city’s pooled investment fund.

Charter Amendment: Retirement Board Composition

The council considered a resolution to place before voters on Nov. 8 a charter amendment to alter the composition of the board of trustees for the city’s retirement system.

Retirement Board Composition: Background

The composition of the nine-member body as currently set forth in the charter is as follows: “(1) The City Administrator and the Controller to serve by virtue of their respective offices; (2) Three Trustees appointed by the Council and to serve at the pleasure of the Council; (3) Two Trustees elected by the general city members from their own number (general city members being members other than Policemen and Firemen members); and (4) Two Trustees elected by the Policemen and Firemen members from their own number.”

The proposed change would retain nine members but would distribute them differently: (1) the city controller; (2) five citizens; (3) one from the general city employees; and (4) one each from police and fire.

If the measure passes on Nov. 8, it will still need to be ratified by the city’s collective bargaining units in order to take effect.

In 2005, a “blue ribbon” commission – tasked to make recommendations about the city’s retirement board and the city’s pension plan – had called for a change in the board’s composition to be a majority of trustees who are not beneficiaries of the retirement plan and, in particular, to remove the city administrator’s position from the board.

In 2008, a member of the retirement system’s board of trustees, Robert N. Pollack, Jr., resigned from the board in part due to the city’s failure to enact recommendations of the blue ribbon panel. [.pdf of blue ribbon panel report] [.pdf of Pollack's resignation letter]

Under the terms of new city administrator Steve Powers’ contract, he will not be a beneficiary of the city’s retirement plan, but will instead have a 401(a) plan.

The city’s retirement program is supported in part by the levy of a retirement benefits millage [labeled CITY BENEFITS on tax bills], currently at a rate of 2.056 mills, which is the same rate as the city’s transit millage. A mill is equal to $1 for every $1,000 of a property’s taxable value.

Retirement Board Composition: Council Deliberations

Marcia Higgins (Ward 4) introduced the proposed ballot language asking voters to amend the city charter and described how the state attorney general’s office – after back and forth with the city – had provided approval of the ballot language at 4:55 p.m. that day.

Stephen Rapundalo (Ward 2) scrutinized the proposed ballot language, which resulted in single word deletion from the language [deleted word indicated with strikethrough]:

For the purpose of adding two additional citizen trustees, removal of the City Administrator as a member of the Board, and decreasing the number of elected general member trustees, shall Section 17.2 (a) of the Charter be amended to restructure the composition of the nine-member City Employees Retirement Board of Trustees to a membership of 5 appointed citizen trustees, one elected trustee each for general City general members, fire members, and police members, along with the continued membership of the City Controller?

Based on the interaction between Rapundalo and assistant city attorney Mary Fales, the inclusion of the first instance of “general” was erroneous. It was stricken as an administrative amendment on which the council did not vote.

Tony Derezinski (Ward 2) wanted to know what the nature of the issue was that had caused the delay in the attorney general review. Higgins explained that it had to do with the terminology of “chief financial officer” versus “controller.” Higgins thanked the city attorney’s office staff for its work, which Rapundalo echoed.

Rapundalo noted that the issue had been going on for a number of years. The change to the charter should go a long way to establishing a board that has a little bit more independent oversight, he said. And by virtue of that, it would provide more transparency and reduce the perception of conflict of interest for those sitting around the retirement board table, he said. Higgins added that the city’s unions will need to ratify the language as well, even if the charter amendment passes.

Outcome: The city council voted unanimously to approve the placement of the retirement board charter amendment on the Nov. 8 ballot.

Anti-Idling Law?

Although it originally appeared in the slot designated for board/commission-initiated business, an anti-idling item was moved on the agenda to the section for written communications from the city administrator. The council formally received the communication from its environmental commission: a resolution approved by the commission in February 2011 that refers a draft anti-idling ordinance to the city council. The ordinance would aim to reduce instances of unnecessary idling by internal combustion engines of all types when not “doing work.”

The resolution approved by the city’s environmental commission makes reference to the city council’s direction to city staff to develop the ordinance, but does not mention the date when the council passed a resolution giving that direction – July 6, 2004.

Examples of unnecessary idling cited in the draft resolution are “warming up a vehicle, dropping off or picking up children at school, loading or unloading cargo, pulling over to take a cell phone call, or waiting in line at a drive-thru window.” However, the draft ordinance explicitly exempts “vehicle queues for drive-through goods and services.” [.pdf of whitepaper including draft ordinance]

Councilmembers addressed the issue during one of the communications slots on the agenda. Margie Teall (Ward 4) thanked Sabra Briere (Ward 1) for tracking down the resolution passed by the council seven years ago that gave direction to city staff to develop an ordinance. It had gone to the city attorney’s office and other city staff, including the city’s environmental coordinator Matt Naud, and back to the environmental commission.

Teall, who serves on the environmental commission, observed that the item had accidentally landed initially on the wrong part of the agenda – but said that the communications items are often overlooked. Teall noted that it’s the city environmental commission’s resolution and the city council will be looking at it in the near future. Teall said she’d welcome comments and discussion and perhaps a city council working session on it.

Teall invited Naud to the podium. He described how 50-100 cities have such an ordinance. He traced Ann Arbor’s effort on the topic to a resident of The Armory – a residential development at Fifth and Ann streets – who was concerned about school buses idling in front of the Hands-On Museum. The museum is immediately adjacent to The Armory. Naud allowed that it had taken a long time (since 2004), but reported that the city had also accumulated a lot of good data. He suggested that this was now an occasion to open up a community discussion.

Outcome: The city council did not take any action on the item – it was ultimately listed on the agenda as simply a communication from the city administrator.

University of Michigan Football Traffic Controls

Before the council for its consideration was a resolution stating that no traffic controls for University of Michigan home football games will be provided starting this season, unless the university reimburses the city for costs associated with erecting barricades and changing traffic signals to facilitate efficient movement of traffic.

University of Michigan Football Traffic Controls: Background

The cost of providing these signs and signal services is around $100,000 per year. The university already reimburses the city for police and fire services associated with home football games.

From the resolution: “Resolved that the City Administrator shall not provide Signs and Signals services to UM for Special UM Events unless: UM and the City execute a contract prior to August 26, 2011, that provides for the full reimbursement to the City of all direct and allocable costs associated with the provision of Signs and Signals services to UM for Special UM Events.”

Michigan’s home opener this year, against Western Michigan, falls on Sept. 3.

Left to right: interim city administrator Tom Crawford, Marcia Higgins (Ward 4) and Christopher Taylor (Ward 3).

The issue is a persistent point of frustration on the city council, because traffic control for football games is a dollar cost to the city, but the city has limited leverage with the university to extract payment. That’s due in part to the fact that traffic control is seen not as merely a matter of convenience, but rather of public safety.

From a March 2010 city council budget work session report: “Christopher Taylor (Ward 3) asked how much of [football traffic control] was an issue of convenience versus public safety. Chief of police Barnett Jones stated that it was all safety-related. Without the combination of cars, barricades and signals, he said, ‘it would be a major malfunction.’”

From a January 2011 city council budget retreat report: “Some councilmembers seemed to suggest that concessions from the university could be won by withholding city consent when the university wanted something from the city. The university’s desire to include Monroe Street as part of the UM Law School campus was cited as a specific example. [City administrator Roger] Fraser, though, counseled that each situation should be evaluated unto itself. He pointed to the planned Fuller Road Station as an example of the importance of that principle.”

From a March 2011 city council budget work session report: “Responding to councilmember questions, [public services area administrator Sue] McCormick said the city did not send the university invoices for the regular home football games, because the university has made it clear that it will not pay. McCormick said when she’d notified UM of the city’s intention of invoicing for the Big Chill, the response she gotten was, ‘We really don’t know how we’ll fund that.’ There was little recourse for the city to take, she said, and in the end the city would have to write it off.”

University of Michigan Football Traffic Controls: Council Deliberations

Christopher Taylor (Ward 3) introduced the resolution, acknowledging that it had been added late to the agenda. By way of explanation for the lateness, he offered the fact that the city and the university had been involved in ongoing conversations that were progressing well, but he hoped the resolution would improve things. He noted that football Saturdays are “a very big deal” for the university and the city community.

Taylor went on to say that the city cooperates with the university to ensure the efficient and safe operation of large university events. It includes police and fire services as well as traffic management services. The costs for the police and fire services are reimbursed by the university, he explained. However, up to now, the traffic management services have not been reimbursed. The city is currently having a conversation about the university’s possible reimbursement of the traffic control costs, Taylor said.

In every good conversation, Taylor continued, it’s sometimes useful for there to be clarity about the position of the parties, and the resolution was intended to provide that clarity.

Tony Derezinski (Ward 2) expressed concern about the timing. He asked for clarification about the time pressure, given that the football season was fast approaching. Taylor said the conversations had been progressing well, but there was some lack of clarity about whether the city will continue to provide traffic control services in the absence of reimbursement.

Margie Teall (Ward 4) then stated that UM can contract with some other organization to provide the service. However, interim city administrator Tom Crawford made clear that’s not actually the case, saying that police and fire services are already reimbursed and that the signs and signals work involves the city’s staff, working with city assets – it can’t really be done by some other organization.

Crawford went on to say that other communities sometimes contacted the city to learn how the city manages to provide the level of services it does provide in connection with football crowds. [Michigan Stadium, located at Main and Stadium with a capacity of 109,901, is the largest in the country.]

Mayor John Hieftje said that the proliferation of games has made it a real burden on the city staff and he felt it was appropriate to have a contract.

Sandi Smith (Ward 1) brought up another point for clarification – was this a matter of looking forward, or also about asking the university to pay for past years of traffic controls? Crawford said he was in the middle of fruitful discussions that included last year as well as upcoming years. He called it an issue that still needs to be resolved.

Outcome: The city council voted unanimously to approve the resolution that directs the city administrator not to provide traffic controls for university football games, unless the university agrees to reimburse the city’s costs.

Ward Boundary Changes

The council considered final approval to minor changes in the apportionment of its five city wards, made in response to population changes revealed by the 2010 census. The changes will not take effect until after the Nov. 8 general election. According to the city charter, city wards must have the general shape of a pie-shaped wedge, with centers of the tips lying at the center of the city. The council had given the boundary changes initial approval at its Aug. 4 meeting.

The council had postponed the issue at its July 5 meeting, but not before unanimously agreeing to alter the timing of the boundary changes, which had originally been recommended by the city attorney’s office to come between the primary elections for city council, which were held Aug. 2, and the general election to be held Nov. 8.

While the minor changes to the boundaries themselves had not been met with strong objections, the timing had been controversial. So at their July 5 meeting, councilmembers agreed to move the effective date of the boundary changes to Dec. 1, 2011.

The staff-recommended tweaks, given initial approval at the Aug. 4 meeting, showed minor differences from the changes recommended on July 5. All changes involve the way the tips of the pie-shaped wedges come together.

In the July 5 version, Ward 5 was bounded by Huron Street to the north and Madison Street to the south as it came towards the city center. In the Aug. 4 version, the Ward 5 northern boundary was dropped to Liberty Street, and to compensate the Ward 5 pie tip extended farther to the east.

In the July 5 version, the boundary between Wards 3 and 4 was aligned to Packard Street. But in the Aug. 4 version, the existing protrusion of Ward 4 across Packard, between Arch and Wells streets, was preserved. And to compensate, Ward 4 was pushed back from South University, with the result that Monroe Street, east of State Street, is a part of Ward 3. [.pdf of staff-recommended tweaks from Aug. 4] [.pdf of staff-recommended tweaks from July 5.]

Ward Boundary Changes: Public Hearing

Because the ward boundary changes reflect a change to the city’s ordinances, a public hearing was required.

Only one person spoke. Thomas Partridge called on the council to take into account the socio-economic status of residents in the reapportionment of the wards. Is there anyone on the council who represents the middle class of Ann Arbor? he asked. Are there students or disabled people who come from lower income brackets? He called on the council to give additional consideration to how each ward is represented. He suggested having an at-large representative on the council.

Ward Boundary Changes: Council Deliberations

Mayor John Hieftje asked that someone explain what was going on and why the reapportionment was happening. Sabra Briere (Ward 1) explained that the 2010 census showed that Ward 1 gained population since the previous census in 2000, relative to the other four wards. The easiest way to restore the balance was to look at the densest part of the city near the downtown.

Each boundary is changing, but only slightly, Briere said, and in the end all five wards are all close to balance. Hieftje elicited from the city clerk, Jackie Beaudry, that residents in affected areas, whose wards are changing, would by law receive a new voting card. Briere reminded everyone that the new boundaries don’t become effective until after the Nov. 8 election – on Dec. 1.

Outcome: The city council voted unanimously to give final approval to the ward boundary changes.

Medical Marijuana License Application Fees

A resolution was on the agenda to establish an application fee of $600 for licenses to operate a medical marijuana dispensary in the city. The fee covers a total of approximately nine hours of work by staff in the city clerk’s office, police department, planning department, and the attorney’s office.

Sabra Briere (Ward 1) talks with Dennis Hayes before the city council's Aug. 15 meeting started.

The licenses were established by a city ordinance given its final approval at the council’s June 20, 2011 meeting. The ordinance distinguishes between an “application fee” and a “license fee.” The license fee, according to the city’s ordinance, is to be reviewed by a licensing board, with members to be appointed by the mayor.

The ordinance becomes effective Aug. 22, which is 60 days after its date of legal publication, on June 23. Applicants who were already in business before the city council enacted its Aug. 5, 2010 moratorium have 60 days after the effective date to apply for a license.

The city’s communications to this point with prospective applicants has not been perfectly smooth. A letter sent out by Wendy Rampson, head of planning for the city, was met with objections because of the city’s insistence that “proof” be provided that a business was in operation before Aug. 5, 2010 – beyond an affidavit attesting to that effect. The city’s ordinance appears to empower the licensing board, not staff in the city attorney’s office or the planning department, with evaluating the merits of license applications.

Medical Marijuana Application Fees: Public Commentary, Hearing

Dennis Hayes addressed the council at Monday’s meeting, having appeared around a dozen times over the course of the last year as the council debated the medical marijuana ordinances. Hayes told the council it was nice to be back again. He said he appreciated how the city council had responded quickly to questions about implementation of the law. He encouraged the council to approve the fee, noting that the city would incur substantial expenses any time there’s something new. He felt the Ann Arbor law would be a productive example for the rest of the state.

During the public hearing on the fee, Thomas Partridge spoke in favor of placing restrictions on access to medical marijuana.

Medical Marijuana Application Fees: Council Deliberations

During the scant council deliberations, Sabra Briere (Ward 1) stressed that the fee the council was approving was an application fee, not a licensing fee.

Outcome: The city council voted unanimously to approve the $600 application fee for medical marijuana licenses.

Medical Marijuana: Licensing Board Nominations

Nominations to the medical marijuana licensing board were also made later at the Aug. 15 meeting: Patricia O’Rorke, James Kenyon and John McKenna Rosevear. Sabra Briere (Ward 1) was nominated as the city council representative. The five-member licensing body is to consist of one member of the city council, one physician, and three other Ann Arbor residents.

Still needed is a physician to serve on the board. The nominations will be confirmed at the council’s next meeting.

Ann Arbor Downtown Development Authority

The Ann Arbor Downtown Development Authority came up in two ways at the council’s Aug. 15 meeting. First, nominations for re-appointment to the DDA board were announced. And second, the owner of the Jerusalem Garden restaurant, Ali Ramlawi, again addressed the council about his frustration over the underground parking garage construction project, which the DDA is managing.

Ann Arbor DDA: Nominations

Appointments to the DDA board are made by the mayor, subject to confirmation by the city council. Mayor John Hieftje nominated John Mouat and Joan Lowenstein for reappointment, but Gary Boren, who was elected this July by his colleagues as chair of the DDA board for the coming year, was not reappointed. Nominated to replace Boren was Nader Nassif, a local attorney. Boren is also an attorney.

In an email sent late Monday to The Chronicle, after the nominations appeared late on the council’s agenda, Boren wrote that Hieftje had met with him a few weeks ago and at that meeting the mayor had told him he was not inclined to reappoint Boren. Boren acknowledged that he and the mayor had philosophical differences about the role of the DDA. About the decision not to be reappointed, Boren wrote that “I am disappointed, but not surprised – and not at all bitter.”

The four-year terms of all three DDA board members – Boren, Lowenstein and Mouat – had actually expired on July 31. The mayor’s appointment of Bob Guenzel to the DDA board last year also came late, after Jennifer S. Hall’s term had expired.

At the DDA’s annual meeting early this July, DDA board member Newcombe Clark provided a chance for the mayor to announce publicly any intention not to reappoint Boren, when Boren’s name was put forward as a candidate for chair of the board for the coming year. Clark asked if Boren’s term would be renewed. The mayor declined to respond to Clark’s question. From The Chronicle’s DDA meeting report of July 6, 2011:

Newcombe Clark asked if Boren’s term was being renewed – that is, would he be reappointed by the mayor to serve on the board? By way of background, outgoing chair Joan Lowenstein’s term on the board ends on July 31, 2011, as do the terms for Gary Boren and John Mouat. Boren has been a vocal proponent of the idea that the DDA is an independent corporate body and not an arm of the city of Ann Arbor.

Last year, Clark had pointedly abstained from voting in the officer elections over the lack of information about reappointments to the board. From Chronicle coverage of the July 7, 2010 DDA annual meeting:

Abstaining from each of the officer votes was board member Newcombe Clark.

Clark explained to The Chronicle after the meeting that there’d been no indication from the mayor whether the two board members whose appointments are expiring July 31 – Jennifer S. Hall and John Splitt – would be reappointed. Clark said he could thus not be certain of the full range of choices for board officers.

Splitt was reappointed; Hall was not. Bob Guenzel was appointed instead of Hall.

In response to Clark’s question this year, Lowenstein said they did not know that yet. Mayor John Hieftje, sitting at the board table, did not offer any statement about whether he planned to nominate Boren for the city council’s approval for reappointment.

At its first meeting in September, the DDA board will presumably elect a new chair. The board’s pattern historically has been to select its vice chair as the next chair. Elected vice chair in July was former Washtenaw County administrator Bob Guenzel, who joined the DDA board a year ago.

Outcome: The council will not vote on the confirmation of DDA appointments until its first meeting in September. Those appointments will presumably not include the kind of public hearings that Stephen Kunselman (Ward 3) suggested during his communications at the council’s Aug. 4, 2011 meeting. However, allocation of the 10 public commentary reserved time slots at the beginning of every council meeting gives preference to those speakers wishing to address agenda items – and the confirmations will be on the agenda.

Ann Arbor DDA: Construction Complaints

During public commentary, Ali Ramlawi reminded councilmembers that he had also addressed them last month. He’s the owner of the Jerusalem Garden restaurant, located next to the construction site of the underground parking structure being built along Fifth Avenue. He expressed frustration about reading the response by Susan Pollay, executive director of the DDA, to his previous criticisms – a response that was published in AnnArbor.com.

Ramlawi characterized Pollay as claiming that the DDA had provided trash pickup, snow removal and lighting. He said those are ordinary city functions, which the city has “delivered flawlessly” since 1987 when the restaurant opened. With respect to the snow removal, he said he had to call several times this past winter because of the build-up of snow obstructing pedestrian walkways. He felt like he was a “cop on the beat” on the corner, because he had to call and complain about trash, lighting and snow removal.

He alluded to the expense of the DDA’s wayfinding sign project, saying that for an organization that had spent $1 million on some signs, its efforts to place signage indicating that the restaurant was still open have been “poor.” Two years into the project, he said, the DDA had not delivered any kind of signage. The problem is not confined to Jerusalem Garden, he said – people come in wondering where the library and the post office are.

He asked the city council to review the situation and use this as a learning lesson. He also called for a complete review of the DDA board appointment process – noting that appointed officials were making important decisions. He concluded by saying that to give credit to the DDA for the success of downtown Ann Arbor is like giving Al Gore credit for inventing the Internet.

By way of additional background,  construction-orange-style signs about businesses have been in place in two locations in connection with the parking garage construction project since it began. At the intersection of Fifth Avenue and Washington Street, a sign placed on the left side of the street facing the one-way traffic heading south on Fifth Avenue indicates generically that businesses are open – no businesses are named. And at the next intersection of Fifth Avenue, at Liberty, a sign facing southbound Fifth Avenue traffic is placed with the names of businesses still open. No signs for eastbound or westbound Liberty Street traffic appears to have been placed.

That signage is actually required as part of a settlement agreement in connection with a lawsuit filed against the city of Ann Arbor about the project, to which Ramlawi was a party. From the settlement agreement:

Throughout the construction process, the City agrees to provide signage that directs customers to Herb David and Jerusalem Garden. Such signage will be similar to what the City has provided in the past as part of other City construction projects.

Act 88 Economic Development Tax

Before the council for its consideration was a resolution urging the Washtenaw County board of commissioners to use Act 88 of 1913 to levy a tax to support economic development in the county.

Act 88 Economic Development Tax: Background

For the last two years, the county board has levied the tax – at a rate of 0.043 mill. (One mill is $1 for every $1,000 of a property’s taxable value.) The council resolution was brought forward by Carsten Hohnke (Ward 5), Margie Teall (Ward 4), Sandi Smith (Ward 1) and Christopher Taylor (Ward 3).

Because Act 88 predates the state’s Headlee legislation, the board does not need to put the issue before voters in order to levy the tax. The county board could, by the Act 88 statute, levy such a tax up to 0.5 mills, or more than 10 times the amount it has chosen to levy the last two years.

Last year in November, the county board approved the Act 88 tax with just a six-vote majority on the 11-member board. Kristin Judge, Mark Ouimet and Wes Prater dissented. Jessica Ping abstained, and Rolland Sizemore Jr. was absent from that Nov. 3, 2010 meeting.

For 2011, the allocation of the roughly $611,266 raised by the countywide Act 88 tax broke down as follows: $200,000 to Ann Arbor SPARK; $50,000 to SPARK East; $100,000 to the Eastern Leaders Group; $144,696 to the county’s department of economic development and energy; $15,000 to fund a Michigan State University Extension agricultural innovation counselor for Washtenaw County; $27,075 to fund horticulture programming for the Washtenaw MSUE horticulture educator; $59,229 for 4-H activities, including allocation to the Washtenaw Farm Council for operating the Washtenaw County 4-H Youth Show & 4-H agricultural programming for the 4-H extension educator; and $15,000 to support the work of the Food System Economic Partnership (FSEP).

SPARK is also supported by Ann Arbor taxpayers through a contract with the city of Ann Arbor for business development services. At its June 20, 2011 meeting, the city council authorized the city’s annual $75,000 contract with SPARK. That translates to the rough equivalent of 0.017 Ann Arbor city mills. (Each mill levied within the city of Ann Arbor translates to roughly $4.5 million.) Together with the countywide Act 88 millage, direct Ann Arbor taxpayer support of economic development translates to the equivalent of at least .06 mills (0.043 + 0.017) or roughly $270,000.

Ann Arbor SPARK is also the contractor hired by the city’s local development finance authority (LDFA) to operate a business accelerator for the city’s SmartZone, one of 11 such districts established in the early 2000s by the Michigan Economic Development Corp. (MEDC). The SmartZone is funded by a tax increment finance (TIF) mechanism, which in the current fiscal year captured around $1.4 million in taxes from a TIF district – the union of the Ann Arbor and Ypsilanti Downtown Development Authority districts, though revenue is generated only in Ann Arbor’s district. The specific taxes on which the increment since 2002 is captured are the school operating and state education taxes, which would otherwise be sent to the state and then redistributed back to local school districts.

Act 88 Economic Development Tax: Council Deliberations

Christopher Taylor (Ward 3) introduced the resolution. He noted that the question of whether to levy the tax will soon be before the county board of commissioners. [A public hearing on the millage is set for the board's Sept. 7 meeting.] Taylor portrayed the millage as costing the owner of a $250,000 house about $5.38 a year. He encouraged the council to support the resolution, in light of the utility of the money that the millage would generate countywide.

Carsten Hohnke (Ward 5) echoed Taylor’s sentiments. He also noted that the county had recently reorganized itself by merging three departments, including its economic development department. The merger will present a greater challenge to the county staff, Hohnke said, but it will be able to leverage the Act 88 millage that much more efficiently. He mentioned the idea of promoting heritage tourism.

Sabra Briere (Ward 1) asked what happens if the county board doesn’t approve the levy of the millage. What are the effects on economic development at the county level if it doesn’t pass? she asked.

Expressing some hesitancy, Hohnke said he didn’t know, but offered some thoughts. The millage brings in around $600,000 and is deployed in a number of ways in partnership with other organizations, including Ann Arbor SPARK. In some activities, Hohnke said, it’s the county that takes the lead, and he ventured that you’d see a scaling back of those activities if the millage were not levied.

Outcome: The city council voted unanimously to adopt the resolution urging the county board’s passage of the Act 88 millage.

West Park: Flooding, Tennis Courts

Councilmembers heard from a resident about flooding related to a stormwater project in West Park, and they used the occasion of a construction contract for tennis courts in the park to talk about some of those concerns.

West Park: Public Commentary on Flooding

During public commentary at the start of the meeting, Daniel Marano introduced himself as a resident who lives on the west side of town, on Maple Ridge. He reported a severe flooding problem on his street that he said seems to be tied to the engineering failure of the West Park drainage and stormwater system.

Maple Ridge, looking south.

By way of background, the city undertook major renovations to West Park using federal stimulus funds and revolving loans facilitated by the county’s water resources commissioner. [Chronicle coverage: "West Park Renovations Get Fast-Tracked"]

In February 2011, Craig Hupy – head of systems planning for the city of Ann Arbor – reported to the park advisory commission on the status of a failed swirl concentrator, which had collapsed, and seven other swirl concentrators that were in some state of failure.

Swirl concentrators are underground vessels that help remove particulates from stormwater before it flows into the stormwater system. Based on an August 2011 city staff memo, the situation is being analyzed as a problem with both the project design and the product’s manufacture. The city is expecting to recover costs from multiple parties. The memo acknowledges upstream flooding that was experienced during project construction, which took place during the summer of 2010:

During the construction of the project, flooding was experienced upstream of the work area during one of the several large storms experienced in the summer of 2010. In addition, in October of 2010, after the stormwater work had been completed, one of the swirl concentrators on the north branch collapsed, creating a sinkhole near the northwest corner of the park. … In response to the upstream flooding, the weir plates that served to divert flow into the swirl concentrator units were removed due to concerns over their effect on upstream flooding. … Currently, the weirs are still removed, leaving the below ground sewer system to function essentially as it did prior to the 2010 construction,

The street where Marano lives is upstream from West Park – Maple Ridge runs north-south, parallel to (and one block west of) Seventh Street, which is West Park’s western boundary.

Marano described a phenomenon where a collection of several feet of water appears out of nowhere, lasts for about an hour or so, followed by a “catastrophic emptying” of the entire street. It’s like two giant bathtub drains, he said, that drain the street in a matter of minutes. There’s a real possibility of danger to people, pets, and children, he said. He said he had about a foot of water in his car on Tuesday morning, which is when he realized the extent of the flooding. This type of flooding has never happened before in any neighbor’s memory, he said. The first time it happened was last year, on Aug. 10, 2010.

Marano said that when he’d reported it to the city, he was met with derision, and the claims were ignored. It’s a lot more than just standard runoff, he said. He concluded by saying it’s a safety risk.

West Park: Tennis Courts

Before the council for its approval was a $216,331 contract with ABC Paving Co. to renovate the tennis courts at West Park. It’s a contract that the city’s park advisory commission had discussed at its June 21, 2011 meeting and that had been approved by the city council at the council’s July 5, 2011 meeting. However, the resolution had contained a typographical error, and the contract had only been approved for $166,331. So it was back before the council for re-approval.

The council did not discuss the paving contract. However, Carsten Hohnke (Ward 5) and Mike Anglin (Ward 5) expressed their concern about the West Park stormwater renovations that had been raised during public commentary by Daniel Marano. [The tennis courts at West Park are situated off Huron Street, considerably above the plane of the park where the stormwater improvements were undertaken.]

Hohnke stressed that the contemporaneous flooding and construction work events were not conclusive with respect to establishing a cause-and-effect relationship. However, he allowed that the timing was suggestive of such a relationship, and he asked that the interim city administrator look into the issue. Anglin expressed his hope that a good resolution to the issue could be found and acknowledged the stress on the residents who live in the affected area.

The flooded neighborhood is in Ward 5, which Anglin and Hohnke represent.

Outcome: The council approved the contract with ABC Paving Co.

Fuller Road Station

Fuller Road Station was brought up during public commentary, as well as by councilmembers.

Fuller Road Station: Public Commentary

Nancy Shiffler spoke on behalf of the Huron Valley Group of the Sierra Club. She said that on reviewing a recent letter sent to the community by mayor John Hieftje, she was pleased that the letter attempted to address questions that have arisen about the project. She first reiterated her basic objection of using a portion of Fuller Park for the construction of a parking structure.

She noted that the letter indicates the University of Michigan will pay all upfront costs for the construction and that the city’s portion of the cost would be made up over time. [The memorandum of understanding between UM and the city on the planned Fuller Road Station specifies a 78%-22% split for the cost-sharing arrangement.]

The portion of the mayor’s letter to which Shiffler was referring reads:

Although the University of Michigan and the City of Ann Arbor will share usage of the parking structure/bus station portion, the University will pay almost all upfront costs to construct Phase 1 of the Fuller Road Station. Under the plan that is still being worked out, the City will own FRS and the City’s portion of the costs will be made up over time from funds generated by parking spaces.

Based on earlier estimates, she said, the city’s portion to be made up over time would be around $10 million. With 220 parking spaces available for the city’s use, and depending on the users to whom the spaces are allocated, Shiffler estimated that it would take 30 years to repay the $10 million – if the rate for use of those 220 spaces were charged at the maximum rate used by UM in its parking system.

Later in the letter, Shiffler noted, Hieftje states that revenues from user fees for the parking spaces would go to the park system. Will the revenue go to make up for the upfront construction costs, or rather to the park system? Shiffler pointed out this is not clear. She said it appeared the sources of funding are being cobbled together behind the scenes. She wondered what relevance the parking structure has to the rail station. She asked that the city council have all details and disclose them to the public and have public hearings before taking a vote on the project.

Fuller Road Station: Council Commentary

During council communications, after the public commentary, Sabra Briere (Ward 1) noted that the council had heard from a speaker about Fuller Road Station. She allowed that it was a moving target, but said she wanted to remind the mayor that everyone would benefit from a working session on the topic of Fuller Road Station. Hieftje said that as soon as there’s some new information, a working session could be put together.

Previously, at the council’s June 6, 2011 meeting, Fuller Road Station had received extensive public commentary, despite the lack of any item on the agenda related directly to the project.

Partly in response to that commentary and to remarks from Mike Anglin (Ward 5), at that meeting Briere had pushed for a city council working session on the project. From The Chronicle’s report of that meeting:

Sabra Briere (Ward 1) anticipated mayor John Hieftje’s reaction to Anglin’s comments [Hieftje has pushed hard for the project] by telling the mayor that she knew he had a lot of thoughts about Fuller Road Station. But she thought the council should have a working session, so that councilmembers can become more knowledgeable about the issue. Hieftje indicated that he would look into adding something to the calendar.

Then, at the council’s June 20, 2011 meeting, the council revised its calendar for the year to include a work session scheduled for July 11, apparently to accommodate the desire to discuss Fuller Road Station.

Mayor John Hieftje. That kind of hammer, or course, works on a totally different kind of nail.

However, at the council’s July 5 meeting, Hieftje responded to remarks from Mike Anglin (Ward 5) about the upcoming work session on Fuller Road Station by indicating there was no work session on the topic scheduled. He did not acknowledge his earlier explicit assurance that he would look into scheduling one.

At the Aug. 15 meeting, Anglin said he was glad Shiffler had brought up the issue of the parkland. He said he still had concerns about the status of the parkland and that he continued to receive emails about it. He said that in 2008, when voters approved a charter amendment requiring a voter referendum on the sale of any parkland, they thought they were protecting their parks. The legacy of the parks is an important part of the community, Anglin said. When a national environmental group [the Sierra Club] is speaking against it, he said, that should suggest something is amiss.

Anglin said the details are not yet clear enough to sign a contract. During tough times, he said, there are other needs that are more paramount. The project doesn’t seem to have much benefit for citizens, he said.

Sandi Smith (Ward 1) suggested that the city’s park advisory commission take a look at the practice soccer field adjacent to the proposed Fuller Road Station site and perhaps partner with the public art commission to develop something for that space that’s designed to inform people about the Huron River.

Smith said she’d love to see an exploration of some lower-maintenance use of the land that people can enjoy. She asked that the suggestion be conveyed to PAC by the council representatives to that body. Smith mentioned an upcoming RiverUp! event, which Hieftje said he appreciated. He noted that the Wolfpack group of the National Wildlife Federation, of which he is a member, had raised $30,000 for that project. [PAC had been briefed about the project at its July 2011 meeting. See Chronicle coverage: "RiverUp! Focuses on Revitalizing Huron River"]

Green Communities Grant

The council was asked to consider accepting a $50,000 Michigan Green Communities Planning grant from the Michigan Dept. of Natural Resources and Environment (DNRE).

The money will be used in part to enhance a peer learning network of Michigan local government and university staff who are working on sustainability issues. The grant funding also supports holding an annual conference in 2011 and 2012 among Michigan Green Community members. A third activity the grant will support is development of challenge grant opportunities with local governments and Michigan foundations.

Outcome: The city council voted unanimously to approve the receipt of the grant.

Small Claims Policy

On the council agenda was a resolution to approve a policy describing which city staff may represent the city in small claims court and under what circumstances. Small claims issues are limited in dollar amount to $3,000. Under Act 236 of 1961, the city may not be represented in small claims court by an attorney.

So under the policy, city employees who are not attorneys may appear on the city’s behalf, subject to the constraints of the policy, which requires that employees who appear in small claims court have “… direct and personal knowledge of the dispute” and that the city administrator and the city attorney approve in writing the appearance by an employee in small claims court on behalf of the city, for each individual case.

Outcome: The city council voted unanimously to approve the small claims policy.

Water Supply Bonds

Before the council for its consideration was the issuance $7 million worth of revenue bonds for its water supply system. The money will be used by the city to finance improvements to the city’s water distribution system, including portions of the Arbor Oaks subdivision water mains replacement project, the Catherine Street 16-inch water main, the Dover Court/Collingwood water main replacement, physical security enhancements, and Barton Dam concrete repair projects.

Assistant city attorney Abigail Elias explained at the meeting that because the ordinance does not change the city code, it does not require a second reading and public hearing.

Outcome: The city council voted unanimously to approve the issuance of the water supply bonds.

Recision of CUB Requirement

The council was asked to vote on the recision of a resolution passed at its Nov. 16, 2009 meeting, which required execution of Construction Unity Board (CUB) agreements by contractors and subcontractors with the Washtenaw County Skilled Building Trades Council as a condition of award for all city construction contracts. The resolution also required inclusion of the requirement in all construction bids issued by the city.

The resolution was rescinded because Act 98 of 2011 – which became effective July 19, 2011 – prohibits municipalities from including as a requirement in a construction contract anything that would either require or prohibit contractors from entering into agreements with collective bargaining organizations. The act also prohibits discrimination against contractors based on willingness or non-willingness to enter into such agreements.

At the council’s Aug. 4 meeting, interim city administrator Tom Crawford had alerted councilmembers that they would likely be asked to consider the measure at the Aug. 15 meeting.

The item was included as part of the council’s consent agenda – a collection of items on which the council votes “all in one go,” but councilmembers have the option of separating out any items they’d like to discuss separately. That’s what Tony Derezinski (Ward 2) did with the CUB agreement item. He had sponsored the original resolution that was being rescinded.

He noted that the new law prohibits CUB agreements  so the city’s previous action would be illegal. That’s why it’s in the city’s best interest to rescind it, he said, because it brings the city in line with state law.

Outcome: The city council voted unanimously to rescind its previous resolution on CUB agreements.

Pedestrian Easement on Liberty

The council was asked to grant an easement to the owner of 115 W. Liberty St. – Dotcom 115 LLC, which lists its resident agent as local developer Peter Allen. Cost of the easement was set at $2,500.

Local developer Peter Allen and Ann Arbor public art commission chair Marsha Chamberlin, talking before the Aug. 15 council meeting started.

Allen is planning to sell the third floor condo unit in the building and needed the easement to ensure legal access to the entryway on the south side of the building.

Allen attended the meeting – he was also the recipient of a Golden Paintbrush Award presented by Ann Arbor’s public art commission.

Outcome: The city council voted unanimously to approve the easement.

Rezoning of Annexed Property

Before the council for its consideration was a request to rezone the property at 2562 Newport to R1A (single-family residential district.) At the public hearing, Thomas Partridge called on the council to amend the rezoning to require an equal amount or more of affordable housing access in the city. It’s something that Partridge typically calls on the city council to do, any time there is a public hearing on a rezoning of land.

Mayor John Hieftje expressed some irritation with Partridge by saying that Partridge was aware that the property is being annexed into the city and that the kind of resolution he was suggesting could not be done legally.

Outcome: The council voted unanimously without discussion to approve the annexation-related rezoning.

Communications and Comment

Every city council agenda contains multiple slots for city councilmembers and the city administrator to give updates or make announcements about issues that are coming before the city council. And every meeting typically includes public commentary on subjects not necessarily on the agenda.

Comm/Comm: Remembering Gary Lillie

Tony Derezinski (Ward 2) called the council’s attention to the recent death of Gary Lillie, a Vietnam War veteran and a local realtor who was killed by an alleged drunk driver. He called it one of those tragedies that reminds us of the tender nature of life. He said that Lillie deserved a moment of recognition at the city council meeting for the life he gave and the life he lived.

Comm/Comm: Golden Paintbrush Awards

At the start of the meeting, Marsha Chamberlin presented the Ann Arbor public art commission’s Golden Paintbrush awards. Chamberlin, who chairs the public art commission, is also president of the Ann Arbor Art Center.

In August in front of Blimpy Burger, which received a Golden Paintbrush award: 'sno bears now, but Snow Bears later.

The awards had been previously announced at the most recent meeting of AAPAC in July.

This year, winners are: (1) Krazy Jim’s Blimpy Burger, for the Snow Bears sculptures that Rich Magner builds each winter in front of the business at Packard and South Division; (2) Mary Thiefels and TreeTown Murals for the mural outside the Alley Bar along West Liberty; and (3) Peter Allen & Associates, for rock sculptures on North Main Street, a project initiated by Steve Zobeck.

Comm/Comm: Sidewalks

During public commentary time, Kathy Griswold told the council that based on a Craigslist ad, a school crosswalk guard costs $30/day plus benefits, or $5,400 annually. She said that the money would be better spent on other activities. Griswold has long advocated for moving the mid-block crosswalk in front of King Elementary School to the four-way-stop intersection, which would eliminate the need for a crossing guard at that location. The barrier to moving the crosswalk is the need to construct a section of sidewalk that would link the corner where children would cross to a path leading the rest of the way to the school.

On a positive note, Griswold said, she reported that although nothing had been promised, it was possible that the city might be able to provide an alternate location for the Kiwanis Club’s warehouse sale [now located at 415 W. Washington St. instead of the current location W. Ellsworth at Airport Blvd Building #837].

Comm/Comm: Recall Snyder

Thomas Partridge spoke during public commentary time, saying it’s necessary to pursue the recall effort of Gov. Rick Snyder and the leaders of the Republican legislature, who have “turned and glowered into the faces” of people who need vital services. He also called on President Barack Obama to do something or step aside. We need to protect Ann Arbor’s disabled residents and seniors, Partridge said. We need an agenda for progress, he said – housing, transportation, healthcare and education should all be affordable.

Present: Stephen Rapundalo, Mike Anglin, Margie Teall, Sabra Briere, Sandi Smith, Tony Derezinski, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Carsten Hohnke.

Next council meeting: Tuesday, Sept. 6, 2011 at 7 p.m. in the second-floor council chambers at 301 E. Huron. [confirm date]

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of public bodies like 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!

Left to right: Roger Hewitt, mayor John Hieftje, Leah Gunn. Hewitt, a DDA board member, had just handed over a check for $1 million to the mayor. It was the second half of a payment the DDA had agreed to make last year, which had not been required as part of the DDA’s parking contract with the city. (Photos by the writer.)

At Wednesday’s meeting, the board also recapped the previous night’s session of the Ann Arbor city council, which had been a continuation of the meeting that began on May 16. At that meeting, the council had finally ratified its side of a new contract under which the DDA would continue to manage the city’s public parking system.

Key elements of that contract include a transfer to the city of Ann Arbor of 17% of annual gross parking revenues, reporting requirements by the city to the DDA about parking enforcement and street repair, and the ability of the DDA to set parking rates and hours without a city council veto.

The DDA board will likely schedule an extended board meeting in September to prepare for a contractually-required joint working session with the city council, which will include a discussion of parking rates and hours of enforcement.

Included in the usual range of the DDA’s reports from its committees was a review of a recent partnerships committee meeting, when DDA board members began to consider how they would handle the responsibility to plan future uses of city-owned surface parking lots downtown. The DDA was given that responsibility in a city council resolution passed at the council’s April 4, 2011 meeting.

Budget Revisions for FY 2011

By way of introducing the resolution on the agenda to revise the budget, Roger Hewitt observed that the DDA passes a budget every year, but is required by state law to amend the budget to reflect actual income and expenses. That’s what the resolution was about, he said.

Many of the changes are due to the South Fifth Avenue underground parking garage construction and the ratification of the new parking agreement with the city. While they are significant changes to the budget, Hewitt said, these were all items the board had previously discussed, voted on and planned for. [.pdf of DDA FY 2011 budget revisions]

Budget Revisions: TIF

Hewitt ticked through the line items that accounted for revisions in the TIF (tax increment finance) fund budget. One item was an added employee. Another line item requiring revision was for energy grants – it had been increased from $200,000 to $381,000 due to unspent money from previous years. The interest payment on the former YMCA lot was shifted out of TIF and into the parking fund. The payment to the city for the municipal center was reclassified as a grant instead of bond payment. There’s an added expense for the real estate consultant – The Roxbury Group – in connection with the Library Lot request for proposals (RFP). The Zingerman’s Deli brownfield program is a $207,000 item, and the return of excess TIF capture to taxing units in the DDA’s district amounted to $473,000.

Some items that are under budget include lower expenses on the Fifth and Division streetscape improvement project. For the Fifth Avenue underground parking structure, the entire bond payment will be made out of TIF fund for the first five years – after that, the parking fund will take over, said Hewitt. For the bottom line, the TIF fund expenses are $850,000 lower than originally budgeted.

Budget Revisions: Parking Fund

In the parking fund, the budget revision reflects about $800,000 less revenue – due to a delay in new rates going into effect. The rate increases had been delayed from July 1 to Sept. 1 due to concerns about the negative impact on summer business. Legal fees had increased due to work on the new parking contract. About $200,000 had been saved by having Republic Parking staff do information technology work instead of contracting it out to a different entity. Overall expenses for Republic Parking were down this year. Bond payments for the underground parking garage are reduced, because the TIF fund will pick up that cost for the first five years.

Hewitt touched briefly on the other two funds in the DDA’s budget – the parking maintenance fund and the housing fund. The parking maintenance fund didn’t get its usual $2 million transfer this year. Actual parking maintenance expenses had been reduced from $1 million to $600,000. Maintenance costs had been deferred, but over the 10 years in the DDA’s 10-year plan, Hewitt said, the maintenance fund would remain whole. The deferred schedule was based on recommendations from the DDA’s engineering consultant. The DDA had elected not to go ahead with installation of additional e-park stations, saving $1.3 million in the short term.

Russ Collins confirmed with Hewitt that the $2 million reduction in parking fund expenses had been achieved primarily by deferring maintenace.

Outcome: The DDA board voted unanimously to approve the changes to its FY 2011 budget.

May 31 City Council Meeting Re-Cap

Board chair Joan Lowenstein invited Roger Hewitt to make the report out from the DDA’s “mutually beneficial” committee by saying that she hoped this is the last time the board ever has to ask for such a report. Hewitt reviewed recent events, including the special meeting the board had convened on May 27 to ratify the final version of the new parking contract under which the DDA would continue to manage the city’s public parking system.

Hewitt reported how the previous evening, the contract had been considered by the Ann Arbor city council, and had provoked a two-hour debate – an hour and a half of which he’d spent answering questions from councilmembers. Some of the questions Hewitt described as “relevant,” and some had not been so relevant. Hewitt reported that an amendment on restoring a council veto to the contract was defeated 9-2, and the vote on the contract was approved 11-0. So now there’s a new parking contract, Hewitt said. It begins July 1, 2011 and lasts for 11 years – there’s an option for both sides to renew it.

The contract will allow the DDA some flexibility for parking demand management. For their work on the contract Hewitt thanked the DDA staff – Susan Pollay and Joe Morehouse. Pollay had been invaluable in making sure the contract gives the DDA the tools it needs, he said. The contract language is much more clear, so there will be no misunderstanding about what it means. He said that Morehouse had repeatedly been given a new set of numbers to run – he’d cranked out an enormous amount of data to help come up with an agreement the DDA can live with.

Lowenstein said a big advantage of the contract is greater stability. She said the DDA didn’t want to give up as much money as the contract calls for, but that the DDA will move on and will be better for it. She thanked Hewitt for his work and mayor  John Hieftje for “steering the discussion” at the city council meeting.

Hewitt returned Lowenstein’s thanks for helping to work out the politics with the city council and “getting it to the finish line.”

Russ Collins described the contract negotiations as a long process. But he said that “we need to ask ourselves: Did we do right by the voters, taxpayers, citizens?” Collins said he appreciated some of the dialogue about the parking contract generated by city council. He may not have appreciated it immediately when he heard it, but he did appreciate it, he said. He also added that he hoped the city council appreciated the DDA’s dialogue.

Sometimes people get whipped up in the controversy without stepping back and understanding what the accomplishment is, Collins said: The parking system is excellent. Parking, he continued, is an emotional issue that transcends logic. Miraculously, Collins said, both the DDA board and the city council had unanimously approved the parking contract – they can’t lose that point. That makes all the “Sturm and Drang” worth it, he said. Collins thanked Lowenstein and Hieftje.

Hieftje noted that the council had also passed another resolution recognizing the issue of excess TIF capture, and councilmembers had agreed to waive the $712,000 in excess taxes that had been captured from the city of Ann Arbor since 2004. Later, during the discussion on budget revisions, Gary Boren asked how final the excesss TIF capture issue was. Had the other taxing units accepted the calculations as correct? Hewitt told Boren the numbers are based on the opinion of Jerry Lax, the DDA’s legal council. Another taxing authority could challenge the DDA’s calculations, he said. The city of Ann Arbor’s share, in any case, is roughly 60% of the total. Lowenstein confirmed that the return of the excess TIF to other taxing authorities would be made by the end of this month.

Hewitt noted that during the council’s May 31 session, an issue had been raised [by councilmember Stephen Kunselman (Ward 3)] about a possible non-payment of $1 million owed to the city by the DDA, which is related to parking revenues (not excess TIF capture). The issue concerned the payment of the second part of $2 million that the DDA had awarded the city of Ann Arbor last year, which had not been required under the parking contract then in place.

Hewitt said he had a check for the mayor, which he handed to Hieftje, saying, “Now, we’re even.”

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: Downtown Development

Russ Collins reported that Cresson Slotten, the city of Ann Arbor unit manager in the systems planning division, had given a presentation to the partnerships committee on the city’s water and sewer system. Collins said citizens should know that most of it was installed about 100 years ago – things have changed over the last 100 years.

Collins described the problem that is faced when a developer is “first in” and needs to bear the entire cost of installing a new water main, to which subsequent developers get free access. That really doesn’t seem fair. Sandi Smith, who co-chairs the partnerships committee with Collins, also noted that Doug Kelbaugh, former dean of the University of Michigan college of architecture and urban planning, and lecturer Kit McCullough had approached the committee and shared their thoughts on a public process for the future use of city-owned downtown parcels. [Chronicle coverage: "DDA Preps Downtown Ann Arbor Process"]

They want to develop a shorter term 5-year vision as well as a 25-year vision, Smith said. She noted that local developer Peter Allen has also made some efforts in this direction, too, already talking to individual business owners in the area of the Library Lot, where the DDA is building an underground parking structure. Allen is doing this on his own, Smith noted. She said the committee had asked Kelbaugh and McCullough to come up with a specific proposal, and they’ll present that at the next meeting of the DDA partnerships committee. The DDA can then decide if it wants to hire them. The next meeting of the partnerships committee is June 8, 2011 at 9 a.m. at 150 S. Fifth Avenue.

Local developer Peter Allen appealed to the map on the wall for his brief remarks made during public commentary at the DDA board’s June 1 meeting.

Peter Allen was also present at the June 1 meeting. He took the opportunity –provided at the end of all DDA board meetings for public commentary – to briefly sketch some preliminary feedback he’d heard from those people with whom he’d spoken so far. He described the need to connect “four corners,” which are: the Allen Creek greenway; the riverfront of the Huron River; the Fuller Road Station (a proposed parking garage, bus depot and possible train station); and the University of Michigan campus.

Ray Detter’s report from the downtown citizens advisory council (CAC) also focused on future planning of downtown. Detter explained that he had not attended the previous month’s DDA board meeting, because he’d been helping with tours given to 400 high school students to introduce them to the city’s history. He also plugged his annual party, which takes place on June 9.

Detter told the board that the CAC’s meeting the previous evening had included a recommitment to support transportation area planning and the Fuller Road Station – they hoped for an improved design as a result of recently acquired federal funding. The CAC continues to support the downtown planning of the Library Lot, he said. The CAC had unanimously agreed that the Library Lot should be more than a park – it should be a mixed-use development that includes an as-green-as-possible plaza. That new plaza should be connected to Library Lane – a small east-west road, just north of the downtown library building, that will connect Division and Fifth.

Whatever is approved for the Library Lot should add to the city’s tax base, Detter continued. That all sounds like “standard stuff,” allowed Detter. He told the board: “That’s our position and we’ll be sticking to it!” As for the suggestion that the city needs to go back to community for further consultation, Detter said the CAC thinks the last six years that began with the Calthorpe process has already done that. Out of that process had come a community vision and revised downtown plan and downtown parking study. Everybody had their say, Detter contended – city officials, planning staff, and the community.

The A2D2 rezoning process reinforces “our faith in planning,” Detter said. A2D2 replaces a hodgepodge of zoning districts with just two: D1 and D2. Finishing the design guidelines took an additional year, Detter said. Detter mentioned that coming up very soon, on the site of the Prescription Shop on Washington Street, another student-housing type development was being planned – the CAC hopes to be able to support that project, Detter said.

Comm/Comm: Parking Report

Roger Hewitt characterized the parking report for April 2011 as containing nothing dramatic. The 5.5% increase in revenue compared to last year reflects a parking rate increase in the 6-7% range. So overall, Hewitt said, there’s slightly less usage, but it’s essentially pretty flat.

The number of hourly patrons is up slightly. Hewitt also pointed out that the parking system has about 200 fewer parking spaces than it had a year ago – due to the loss of parking spaces because of construction. Hewitt concluded by reiterating there is nothing particularly dramatic –  it’s not growing, but it’s not clearly shrinking, either. Hewitt said there are two private developments underway [601 S. Forest and Zaragon West – previously known as Zaragon II]. So there’ll be some additional demand when they’re completed, he said. Construction on the new underground garage at Fifth Avenue will be completed by that time, Hewitt said, so the parking system will have some flexibility.

Later in the meeting, Hewitt also noted that the DDA has asked Republic Parking to take a look at generating data on “car hours.” Instead of just looking at the financial part of usage data, the DDA would like to look at actual cars in the system. The question is whether software can kick out the data that they think is already there, Hewitt said. It would be a way to measure demand, not just revenues. [.pdf of parking report for April 2011]

Comm/Comm: Parking Customer Survey

Roger Hewitt also reported on the results of a regular survey of parking system customers: 147 responses had been received in April – a 10% response rate. Of those, 41% had rated the system as excellent and 33% had rated it very good. Considering how many people normally react to surveys, Hewitt said, that’s a high percentage. He noted that typically everyone wants plenty of parking and they want it to be free.

Sandi Smith then followed up on a brief discussion of parking customer payments made by credit card, which took place during the budget adjustment deliberations. Those deliberations had drawn out the fact that increased use of credit cards by parking customers had resulted in additional fees of $7,000.

Hewitt said it reflected the fact that payment by credit card at the new on-street kiosks is being embraced by the parking public – 58% pay with credit card. Deputy DDA director Joe Morehouse said that the credit charge processing fee is 5.5%. Based on his experience operating a restaurant, Hewitt said, the smaller the charge is, the higher the percentage. Joan Lowenstein said there might be some federal legislation passed soon that could reduce that percentage.

What Smith wanted to know is if zip code data could be obtained from credit card companies, or if that information could be required at the point of payment. Morehouse indicated that he would look into that.

Smith also suggested that the board schedule an extended meeting at the end of the summer to look at the impact of the newly ratified parking contract on the DDA’s 10-year plan. Hewitt noted that the revised budget would be plugged into the 10-year plan. He also noted that under the new contract, the DDA board would need to hold a joint working sessin with the city council in October. Based on that, Smith suggested that the extended board meeting could take place on an afternoon in September.

Comm/Comm: Retail Recruitment

Reporting out from the DDA’s economic development committee, Joan Lowenstein said the committee was in a listening-and-learning mode. At the last meeting, the committee had representatives  from different downtown area associations and the Main Street business improvement zone (BIZ). Generally, business is up, but not where it was before 2008, they’d reported. They’re grateful to the DDA for help in navigating various city of Ann Arbor logistical hurdles. They’d like to see additional involvement in retail recruitment.

From Maura Thomson, executive director of the Main Street Area Association, they’d heard that business is trending up, but retail businesss have to change their approach – they can’t be just bricks and mortar. Maggie Ladd, of the South University Area Association, had reported excitement about 601 S. Forest, a residential complex that’s under construction and will offer retail floor space. It’s hoped that an anchor store can be attracted, and maybe the DDA can help with that kind of recruitment. Lowenstein said the South University area is also considering formation of a business improvement zone.

Karen Farmer had attended for Kerrytown Market & Shops, Lowenstein reported, and while there was no official representative of the State Street Area Association, committee member John Splitt [who owns Gold Bond cleaners on Maynard Street] was there.

Zaragon II – an apartment building going up at William and Thompson, and now known as Zaragon West – is anticipating more retail space. They’re looking for a resurgence of retail as more people live downtown. Ellie Serras talked about the success of the Main Street BIZ with sidewalk snow removal.

The next main project of the committee – production of a DDA annual report – will be undertaken by DDA research and planning assistant Amber Miller. It will be a glossy annual report that can be used as an informational document and as a selling point. It will describe DDA projects and their impact on the downtown, as well as giving a picture of the current state of the downtown. The report should be finished by the end of the summer or even by the end of the month, Lowenstein said.

Related to that kind of reporting, at the city council’s May 31 session of its May 16, 2011 meeting, councilmember Stephen Kunselman (Ward 3) had raised a complaint: He’d been unable to confirm that the DDA had produced the kind of reports required by the state statute under which the DDA is formed. From the Downtown Development Authority Act 197 of 1975:

(3) Annually the authority shall submit to the governing body of the municipality and the state tax commission a report on the status of the tax increment financing account. The report shall be published in a newspaper of general circulation in the municipality and shall include the following:
(a) The amount and source of revenue in the account.
(b) The amount in any bond reserve account.
(c) The amount and purpose of expenditures from the account.
(d) The amount of principal and interest on any outstanding bonded indebtedness.
(e) The initial assessed value of the project area.
(f) The captured assessed value retained by the authority.
(g) The tax increment revenues received.
(h) The number of jobs created as a result of the implementation of the tax increment financing plan.
(i) Any additional information the governing body or the state tax commission considers necessary.

In response to Kunselman’s complaint, at the council’s May 31 session, DDA board chair Lowenstein had documented an order placed with AnnArbor.com earlier this year to publish the information required under the statute.

Comm/Comm: Pedestrian Safety

John Mouat reported that the DDA’s transportation committee had discussed two topics related to pedestrian safety. They’d received a presentation from Erica Briggs, who works with the Washtenaw Bicycling and Walking Coalition (WBWC). Briggs is working on a project with a DDA matching grant to educate the public about crosswalk laws. The first step is getting a baseline, using a survey and observation.

The other issue the committee addressed was how to use limited funds in targeted areas. Mouat noted that the railroad crossing at William is in poor shape – the DDA could contribute a small number of dollars to get a federal match. On Huron Street, under the railroad tracks, there’s also an area that could be targeted. In connection to the Huron Street location, Mouat alluded to public commentary made by Bill Gross, property manager for 416 W. Huron, at the board’s February 2011 meeting. The committee had also worked on identifying trip hazards downtown, and had looked at crosswalk improvements at State and Liberty, and at Fifth and Huron.

Vegetable-shaped bicycle hoops will appear at the farmers market later in summer, Mouat said. The next meeting of the transportation committee will focus on the getDowntown program.

Invited to the podium, Nancy Shore, getDowntown’s executive director, told the board she would be presenting the transportation committee a report on the go!pass bus pass program. It’s had tremendous success, she said – the program has broken ridership records. Now that the go!passes can be swiped at the farebox for AATA buses, the program has more data about how the cards are being used. The annual commuter challenge in the month of May has also just wrapped up, Shore said.

The getDowntown program is also looking at the question of where the organization will be housed, with one possibility being at the DDA offices. It’s an issue that will need discussion by the getDowntown board, she said. Shore noted that the DDA contributes a tremendous amount to the getDowntown program, which she said has a huge impact on downtown employees.

By way of background, the getDowntown program was previously funded in a four-way partnership with the Ann Arbor Transportation Authority, the city of Ann Arbor, the DDA and the Ann Arbor Area Chamber of Commerce (now the Ann Arbor/Ypsilanti Regional Chamber). In 2009, the chamber essentially withdrew from the partnership, which meant that the getDowntown program needed to find alternate quarters – part of the contribution made by the chamber had been to provide office space. The getDowntown program then moved to offices at 518 E. Washington, with the support of the DDA. [Brief coverage of that is included in The Chronicle's report on the Dec. 2, 2009 DDA board meeting.]

Comm/Comm: Energy Grants

Sandi Smith reported that Dave Konkle had briefed the partnerships committee on the DDA’s energy grant program. The question before the committee is essentially whether to make grant awards on a first-come-first-serve basis or to make it a value-based program. Also, should the DDA try to make many smaller or fewer bigger grants? Those issues will be the focus of the June committee meeting, Smith said.

Comm/Comm: Fifth and Division

John Splitt reported that the only work being done in connection with the Fifth and Division streetscape project is on Division north of Huron: curbs are being re-aligned. On Fifth between Washington and Liberty streets, a 12-inch water main is currently being installed. Joan Lowenstein clarified that the city of Ann Arbor is doing the water main work. Splitt went on to explain that the DDA’s project would follow on that work, so that the street would not have to be repaved, torn-up, then repaved again.

Comm/Comm: Fifth Avenue Underground Parking Garage

Splitt reviewed how the underground parking project is divided into three phases: (1) the east leg – walls are complete or close to being completed; (2) the middle – slabs are still being poured; and (3) the western edge – the foundation will soon be poured, then the structure will be built up from there. Splitt described the work as “progressing nicely.” Repairs and additional reinforcement to the earth retention system will all be complete by the end of this week, he concluded.

Comm/Comm: Welcome Back

Joan Lowenstein led off the meeting by welcoming back Susan Pollay, the DDA’s executive director who’s been out on medical leave for a few weeks.

Susan Pollay, executive director of the DDA, has returned to action.

The board responded with applause. Lowenstein told Pollay, “We all feel great seeing you there.”

Lowenstein said the board also felt great seeing Joe Morehouse, deputy director of the DDA who’s filled in for Pollay in her absence. But she ventured that no one is happier than Morehouse to have Pollay back.

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

Absent: Newcombe Clark, Keith Orr

Next board meeting: Noon on Wednesday, July 6, 2011 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

Purely a plug: The Chronicle relies in part on regular voluntary subscriptions to support our coverage of publicly-funded organizations like the Ann Arbor Downtown Development Authority. 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!

John Splitt holds the commemorative plaque he received last month as outgoing chair of the Ann Arbor Downtown Development board. It's fashioned from earth retention lumber from the underground parking structure currently under construction along Fifth Avenue.

Splitt strolled into the cafe, having walked from his dry-cleaning business, Gold Bond Cleaners. “It’s located on Maynard Street, just on the other side of the arcade,” he said, motioning toward Nickels Arcade, a covered passage connecting Maynard and State.

State Street holds a special significance for Splitt as the gateway to his community involvement. In 2004, Splitt joined the board of the State Street Area Association, an experience he described as an educational process, that “opens your eyes to some of the larger downtown issues.” Once on the association’s board, his interest in community service continued, and in 2006 he was appointed to the board of the Ann Arbor Downtown Development Authority (DDA).

Splitt has served on the DDA board since then and for the past year has served as chair. Joan Lowenstein was elected the new chair at the board’s recent annual meeting, which immediately followed the board’s monthly July meeting.

The view from just outside Gold Bond Cleaners – looking east across Maynard Street to Nickels Arcade, a pedestrian passage leading to State Street.

When asked what issues have been especially memorable during his time on the DDA, Splitt cited the underground parking structure currently under construction on the city-owned Library Lot at South Fifth Avenue. The project, which began construction in October 2009, will include 600 parking spaces. The bond payments for the project are planned to be made out of the DDA’s parking revenues.

The garage includes environmental elements, with the DDA project website touting LED lights and recharging stations for electric cars. The underground parking structure is only part of what the DDA’s website hails as a “new core area redevelopment project,” including “new water mains and electric capacity, a new alley, midblock street and extensive pedestrian improvements.”

The parking structure has been a central focus of Splitt’s time on the DDA, as he is chair of the DDA’s capital improvements committee. Though the underground structure has already begun construction, an ongoing and vibrant discussion remains on what to put on top of the structure once it’s built. During our conversation at Espresso Royale we didn’t discuss that topic explicitly.

However, city officials have been struggling to find an appropriate development proposal for the 1.2-acre lot. In late November last year, six proposals were made for the lot, ranging from an urban park to a hotel and conference center.  By January, the Library Lot Request for Proposal (RFP) Advisory Committee – of which Splitt is a member – had eliminated four of the proposals, leaving two proposals for a hotel and conference center.

Recently, the conversation about what goes on top has been revived as steps are being taken to hire a consultant to evaluate the financial merit of the remaining proposals, using $50,000 provided by the DDA. Stephen Rapundalo, a city council representative for Ward 2, gave an update indicating a re-start to the months-dormant process at a July council council meeting.

As part of current talks, the city and the DDA have been considering how the DDA might take on the primary role in spurring downtown development, specifically that of city-owned surface parking lots within the DDA district boundary. That empowerment of the DDA may impact how future committees similar to the Library Lot RFP Advisory Committee are organized. While Rapundalo chairs the Library Lot RFP Advisory Committee, it’s conceivable that DDA members might chair similar committees in the future.

Though the DDA’s future leadership in downtown development is uncertain, Splitt’s commitment to the DDA has been clear. Before adding community involvement to his list of other obligations, Splitt paused to clear his extracurricular plate. He admitted, “I was pretty involved in my other hobbies and work up until five or six years ago.”

One such hobby: softball. Having grown up playing baseball, Splitt resorted to fastpitch softball due to the lack of opportunity to play baseball as an adult. “It’s amazing how much time that occupied, both in the summer and the rest of the year,” he said. Yet Splitt quit the sport in favor of the State Street Area Association board and, ultimately, the DDA. Splitt describes a simultaneous dry-cleaning decline since 2006, which he said “works out well for the DDA and volunteer work, because I have a little bit more time to devote to that.”

Nevertheless, Splitt said he always finds time to appreciate Ann Arbor.  When asked what it is he enjoys doing downtown, Splitt answered simply, “Walk, eat, and drink,” echoing the State Street Area Association website’s motto: “Shop, eat, live, work, and enjoy entertainment in the heart of Ann Arbor.” Soon, Splitt will find it even easier do just that, as he and his wife are planning to move into the downtown area from one of the leafy neighborhoods near Eberwhite Woods. They’ll relocate to the western edge of downtown, just inside the DDA district.

He explained the decision to move, saying, “I think that we [he and his wife] both are downtown people. We like being close to our businesses, we like the energy of downtown and have grown tired of yard work.” Splitt’s wife, Judy Splitt, is the owner of Salon 344 on the corner of Ashley and William.

Looking west across State Street, through Nickels Arcade. On the other end of the arcade, on Maynard Street is Splitt's dry cleaning business, Gold Bond Cleaners. To the right is Espresso Royal, where the interview for this article took place.

While Splitt’s enthusiasm for his yard might be slack, he is still entirely industrious in his involvement with the State Street Area Association. Most recently, he volunteered at the State Street Art Fair, one of the main events the association runs. When I relayed a personal story of being stuck in the basement of the Michigan Union because of tornado sirens while recently trying to go to the art fair, Splitt eagerly interrupted, adding “A false tornado warning! They sounded the sirens by mistake. That was not a good thing. It hurt sales, certainly.” He continued by saying the State Street Art Fair is especially “cool” because of the mix of artists and merchants.

Splitt’s four-year term on the DDA is done this year, though he has made it clear to the mayor that he hopes to be reappointed. He says with an amiable smile, “So I keep showing up until I’m either reappointed or replaced.”

[Editor's note: The city council agenda for Aug. 5, 2010 indicates a nomination of Bob Guenzel to serve on the DDA board. Guenzel retired as Washtenaw County administrator in May 2010. There's no indication if Guenzel is to replace Jennifer S. Hall or Splitt, both of whose terms ended July 31.]

About the author: Hayley Byrnes is an intern with The Ann Arbor Chronicle.