Highlighted in yellow is the location of the former YMCA lot, which the city of Ann Arbor is considering selling. A $3.5 million balloon payment on the property is due at the end of 2013.

A similar proposal to start the process for selling the lot was considered at the council’s Aug. 20, 2012 meeting, but received the support of only three representatives on the 11-member council: Mike Anglin (Ward 5), Jane Lumm (Ward 2) and Stephen Kunselman (Ward 3). Some councilmembers were generally in favor of selling the lot, but called the effort premature, given a planning effort that was then underway. This time around the resolution was co-sponsored by mayor John Hieftje and the vote was nearly unanimous. The lone vote of dissent came from Christopher Taylor (Ward 3).

What’s changed since August 2012 also relates to a project the Ann Arbor Downtown Development Authority has been working on for almost two years, the Connecting William Street project, a planning effort that includes the former Y lot. The Connecting William Street project was undertaken by the DDA based on a directive from the city council, on a unanimous vote, given at its April 4, 2011 meeting. And at a Jan. 7, 2013 working session, the DDA gave a presentation to the council on its recommendations for future use of five city-owned parcels in the downtown area – the former Y lot, the Kline’s lot, the Palio lot, the Fourth and William parking structure, and the top of the Library Lane underground parking garage.

The city had used a loan to purchase the property from the YMCA for $3.5 million in 2003. The council voted in 2008 to extend a five-year loan with the Bank of Ann Arbor for another five years, through the end of 2013. The interest rate is 3.89%. The interest-only payments work out to roughly $140,000 a year. By the end of 2013, the total interest paid will be around $1.4 million.

A building on the site was condemned, and the cost of demolishing it and abating asbestos was around $1.5 million. The Ann Arbor DDA covered the demolition costs and has covered half of the interest payments. So the total amount of Ann Arbor governmental investment in the property is at least $6.4 million.

Revenue from the surface parking lot on the site – which charges a $1.40 hourly rate – amounts to $105-$140 per space per month for roughly 140 spaces. Over the last year, the lot has generated a rough average of around $20,000 per month. But usage has decreased since the opening of the new 711-space Library Lane underground garage, located across the street.

That parking revenue from the former Y site is collected by the Ann Arbor DDA, which operates the city’s public parking system under contract with the city. Under terms of that contract, the city receives 17.5% of the gross parking system revenues. Also under terms of the contract, the DDA has the option to object to eliminating a facility from the parking system, within 30 days of notification by the city.

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

The amount of the transfer was keyed to the cost of a piece of city-owned property that the city sold recently to the Ann Arbor Transportation Authority. And the justification for the transfer was based on the council’s recent enactment of a formal policy on the use of the proceeds of city-owned land sales.

The $90,000 piece of land is a six-foot-wide strip on the former Y lot at Fifth and William, immediately to the south of the location for the AATA’s planned new Blake Transit Center in downtown Ann Arbor. The $90,000 price was based on an independent appraisal. The AATA board approved its side of that deal this spring at its April 26, 2012 meeting. The city council approved the land sale over a year ago, at its Sept. 19, 2011 meeting. The total parcel area was 792 square feet.

The land sale policy approved by the council on Oct. 15, 2012 had begun as a proposal from Sandi Smith (Ward 1) to allocate 85% of the net proceeds of city-owned land to the city’s affordable housing trust fund. The council originally considered the item at its Sept. 17, 2012 meeting but delayed action. The council eventually opted to adopt a policy that treated land sales on a case-by-case basis – except for the former Y lot at Fifth and William streets, of which the six-foot-wide strip was a part. The enacted policy called for net proceeds from that parcel to be placed in the affordable housing trust fund.

For additional background, see: “City Council to Focus on Land Sale Policy.”

Because the $90,000 piece of property had been a portion of the former Y lot, it was considered by the council in its Nov. 8 action as appropriate in effect to retroactively apply the policy on use of land sale proceeds – by transferring $90,000 to the affordable housing trust fund. The portion of the policy that requires the city to recover its costs associated with the property was not applied – as the city purchased the land for $3.5 million.

The resolution was sponsored by Sandi Smith (Ward 1), Marcia Higgins (Ward 4), and mayor John Hieftje – although Smith was not able to attend the Nov. 8 meeting.

The six-foot-wide strip of land, and its $90,000 price, has been highlighted in recent council deliberations for a different reason – as a funding source for a transportation connector study. The city of Ann Arbor had been asked to contribute $60,000 to an alternatives analysis study of the Plymouth/State corridor, from US-23 and Plymouth southward along Plymouth to State Street, extending south to I-94. The local match was needed for a $1.2 million federal grant that had been awarded to the AATA for the study.

During deliberations on the $60,000 connector study allocation at the Sept. 4, 2012 meeting, Stephen Kunselman (Ward 3) had objected to one of the “whereas” clauses in the resolution. The clause mentioned the availability of $90,000 in the general fund from the land sale, which was more than enough to cover the requested $60,000 local match. So the allocation was essentially pitched as a “return” to the AATA of a portion of the land sale price. Kunselman objected that once the $90,000 was in the general fund reserve, it was no longer earmarked as funds to be used for any particular purpose.

When the council eventually reconsidered the decision on Oct. 15, 2012 and wound up approving $30,000 for the study – because the Ann Arbor DDA had in the meantime agreed to contribute $30,000 – it was Higgins who raised the objection about the “whereas” clause. And the clause was amended out before the council’s approval.

The groundbreaking for the AATA’s new Blake Transit Center – which had occasioned the sale of the six-foot strip of land on the southwestern edge of the AATA’s property – is scheduled for Nov. 19. The AATA board gave final approval of a roughly $8 million budget for the transit center at its Oct. 18, 2012 meeting.

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