The meeting and the letter came after SPARK had declined several previous requests for its financial statements – from rank-and-file residents, journalists as well as elected officials. SPARK’s previous decision not to release past statements became moot when Ann Arbor resident Kai Petainen received the past records on request from the state of Michigan Attorney General’s office.

Ann Arbor SPARK contracts with the city’s local development finance authority – an entity that’s funded through tax increment financing (TIF) – to operate a business accelerator. SPARK also receives grants from several public bodies, including the city of Ann Arbor and Washtenaw County. [.pdf of SPARK's 2006-10 audited statements]

Based on Krutko’s letter, it now appears that SPARK will itself be providing past as well as future financial statements on its own website.

Krutko’s letter was included in a message that Rabhi sent to an online group – called “aa better local politix” – with a positive update on what he described as his efforts to increase SPARK’s financial transparency. Rabhi described the Nov. 25 SPARK board meeting as tense, but was positive about the nature of the board’s conversation and the outcome. From Rabhi’s message:

By the end of the meeting, staff were empowered by the board to develop a comprehensive recommendation on how to move forward and to begin with initial implementation. In my perception, staff actually seemed energized by the way in which I framed up the issue and the ensuing discussion at the board table.

Krutko’s letter to Rabhi and Powers cites specific steps that SPARK will now be taking:

• We have posted our most recent financials on our website.
• We are developing a “Frequently Asked Questions About SPARK” summary to be posted on our website.
• We are preparing to post our 2013 Financial Statements upon completion by our Auditors in Spring 2014.
• We are requesting your help in being placed on an upcoming Board of Commissioners and City Council agenda at that time to answer any questions in these public forums about our financial statements.
• We will develop a Use of Funds Quarterly Report to elected officials, on activities supported by public funding provided to SPARK.
• As we have done in the past, we will continue to respond to specific questions from elected officials at any time.

[.pdf of Dec. 4, 2013 letter from Ann Arbor SPARK's Paul Krutko] [.pdf of Dec. 4, 2013 message from Yousef Rabhi]

Blobs inside the squarish boundaries represent properties or development rights acquired with greenbelt millage funds. The darker squarish area is the original area where millage funds could be spent. The lighter strips to the east, south, and west were added in 2007. (Image links to higher resolution file.)

Though not included explicitly in the millage language, the city approaches the administration of the millage as a one-third/two-thirds split between a portion for parks and a portion for the greenbelt program. So as part of the financial review, commissioners also looked at current fund balances as analyzed based on the one-third/two-third split between parks and greenbelt projects. Noting that the greenbelt fund balance might be on track to be drawn down before the parks portion is exhausted, commissioners seemed to agree that now is a good time to begin mulling what should happen if that scenario played out. The group discussed holding a joint meeting between the park and greenbelt advisory commissions – their last joint session was held in April 2010.

Also discussed on Wednesday was the scheduling of a first meeting of a commission subcommittee that will look at the question of changing greenbelt boundaries. The boundaries define the region where land or development rights on land might be acquired by the greenbelt program. Any change to those boundaries would ultimately require approval from the Ann Arbor city council.

Millage, Bonds

In 2003, Ann Arbor voters passed a 30-year 0.5 mill tax for land acquisition – called the open space and parkland preservation millage. On the summer tax bill, the line item appears as CITY PARK ACQ. The millage and the programs it supports are managed with support from staff of The Conservation Fund, Ginny Trocchio and Peg Kohring. Though not stipulated in the legal terms of the millage, the city’s policy has been to allocate one-third of the millage for parks land acquisition and two-thirds for the city’s greenbelt program.

To get money upfront for land acquisition, the city took out a $20 million bond in fiscal year 2006. That bond is being being paid back with revenue from the millage. Debt service on that bond so far in FY 2011 year has amounted to $815,288.

Bonds: Down to Zero

The city keeps separate track of the greenbelt fund balances in several ways. One way is to track separately: (1) total fund balances due to accumulated unspent millage revenues; and (2) total fund balances due to proceeds from the $20 million bond issuance.

During the greenbelt advisory commission’s discussion of the financial presentation given by Trocchio, commissioner Mike Garfield called attention to the line in the spreadsheet indicating a total overall fund balance of $11,741,975. Also indicated on the sheet was the fact that all $11,741,975 is due to the separate fund balance in (1). Mike Garfield asked if that meant that the commission had spent down the bond proceeds to zero – yes, answered Trocchio. That was the “first pot of money that we wanted to spend down,” she said. Now the millage revenue is getting spent down, which has also been accruing, she explained. Garfield appeared satisfied: “Good!”

Trocchio’s spreadsheet shows that the bond proceeds fund balance in FY 2008 was $9.6 million, and that it was spent down to $6.9 million the following year, and further to $3.3 million FY 2010.

Millage: Contrast Between GAC and PAC

Another way the finances are tracked for the greenbelt and open space millage relates to the policy of allocating one-third for parks land acquisition and two-thirds for the city’s greenbelt program. This one-third/two-thirds division is reflected in the two different public bodies that make recommendations on use of the funds: the park advisory commission (PAC) for one-third of the money, and the greenbelt advisory commission (GAC) for the other two-thirds.

Jennifer S. Hall and Dan Ezekiel, chair and vice chair of Ann Arbor's greenbelt advisory commission.

Trocchio provided as part of her presentation an analysis of the millage finances, along this one-third/two-thirds division for PAC- and GAC-related money. Commission chair Jennifer S. Hall noticed that the GAC-related fund balances had been spent down steadily – from $12.4 million in FY 2008 to $7.4 million in the current fiscal year. In contrast, the PAC-related fund balance in FY 2008 was $4.4 million, and has remained relatively steady through the current fiscal year.

So Hall asked Carsten Hohnke, who serves as the city council representative to GAC, if the city council had had any dialogue about what to do if GAC-related money were exhausted with PAC-related money still available. Hohnke indicated that there was no conversation about that currently, but said it would be useful to begin that conversation with the park advisory commission.

Hall said she felt it would be wise to have the discussion before a great disparity arises between the GAC-related fund balance and the PAC-related fund balance. Garfield reminded his colleagues that the two-thirds/one-third split is not a legal division. [It's not part of the millage language.] It’s simply a working understanding, he said, so having a dialogue makes sense.

A consensus seemed to emerge among commissioners that it would be useful to have a joint GAC-PAC meeting to go over the money question – along the lines of a joint meeting the two bodies had convened on April 6, 2010. Ezekiel recalled that last year only five GAC members were able to attend the joint meeting, which meant that GAC could not go into closed session, which would have been useful on that occasion. [GAC meetings often include closed sessions to discuss land acquisition; PAC handles most of its land acquisition discussions during closed sessions at the meetings of its land acquisition committee (LAC), which includes all PAC members. Discussions of land acquisition are one of the legitimate reasons for a public body to meet in a closed session under the Michigan Open Meetings Act.]

On Wednesday, GAC commissioners expressed an interest in ensuring that a scheduled date for a joint meeting would accommodate as many commissioners as possible. Laura Rubin, for example, said she thought the proposed April 5, 2011 date fell during the Ann Arbor public schools break, and she could not commit to being there on that day.

Details of Financial Picture

Trocchio walked commissioners through the most recent numbers as of Dec. 31, 2010, which marks the midway point through the fiscal year. Millage proceeds to date stand at $2,175,804. [That is comparable to the entire year's collection of millage funds last year and in previous years. In FY 2010, for example, $2,262,001 was collected. Of the two tax bills that property owners receive, the greenbelt tax appears only on the summer tax bills. So the current figure is likely to be very close to the final tally.]

Trocchio noted that the investment income for FY 2010 now reflected a corrected number: $492,576. In response to a commissioner question, she said that the previous number – from unaudited financial statements – had been around $130,000.

[The issue had arisen at the commission's Sept. 8, 2010 meeting, when commissioners had expressed concern about the unaudited figure of $130,011 for investment income for FY 2010. They'd received an explanation from city treasurer Matthew Horning at their Nov. 10, 2010 meeting:

Regarding concerns over investment income, Horning said the good news is the amount reported to GAC in September was an unaudited figure – the final number will be much higher, at about $492,000. To explain the difference, Horning said that at the end of the year, the city does a reclassification entry, required by the Government Accounting Standards Board (GASB). This mark-to-market accounting requires that the city record the actual market value of its investments at the end of the fiscal year – that is, what the value of their investments would be, if liquidated. If it’s worth greater or less than the book value of the investments, you have to record that difference, Horning said.

At the end of the last fiscal year – on June 30, 2010 – the city made a mark-to-market entry of about $362,000 for greenbelt investment income. That figure isn’t reflected in the financial statement that had been presented to the commission, Horning said. So the total investment income is actually about $492,000, he said.

The FY 2010 investment income presented by Trocchio on Wednesday showed $492,576. That's still a decrease from $815,261 the previous year.]

The investment income to date in FY 2011, Trocchio said, is $88,148 and that will be corrected in the same way last year’s figure was adjusted.

Ginny Trocchio gave the mid-year financial update to the greenbelt advisory commission, which met on the seventh floor of the City Center building.

Federal grant reimbursements stand at $1,235,183  she said. Since Dec. 31, 2010, an additional $675,000 worth of federal grants had been received for the Honke and Whitney properties that had been closed on. The grant reimbursements, together with investment income and millage proceeds, showed a combined net income of $3,499,134.

The millage program expenditures to date in this fiscal year total $6,665,645, with $5,682,035 going towards greenbelt projects and $983,609 going towards park projects.

Commission chair Jennifer Hall pointed out that of the roughly $5.6 million that had been spent, almost $2 million was reimbursed with federal grants.

Total administrative expenditures, reported Trocchio, stand at $66,358 year-to-date. Administration costs include staff time for Trocchio and other Conservation Fund staff, as well as personnel and IT costs from the city. The cost of all projects, plus debt service and administrative costs, bring total expenditures so far in FY 2011 to $7,547,290. The net change to the fund balance is negative: $4,048,156.

Commissioner Laura Rubin drew out the fact that the mid-year numbers for some categories of expenditures and revenues made sense to measure against a 50% benchmark, while others did not. She asked if the $7 million expenditures so far meant that potentially for the whole year they could be looking at $14 million in expenditures. Trocchio replied that at year’s end last year, they’d had a lot of closings. This year she anticipated perhaps two additional closings before the end of the fiscal year and then perhaps one at the end of the calendar year.

As far as expenses lining up with the mid-point of the year, Carsten Hohnke noted that administrative expenses appeared to be tracking at or below the annual run rate for those types of expenses. Last year for the entire year, there were $178,892 worth of administrative expenses, compared to a mid-year number of $66,358 for this year. Later in the presentation, Trocchio showed how the administrative costs over the life of the millage – which are limited by ordinance to be no greater than 6% of revenues – are now tracking well under that number. Starting in FY 2005, those percentages each year have trended as follows: FY05, 7.6%; FY06, 5.1%; FY07, 2.0%; FY08, 3.8%; FY09, 4.3%; FY10, 3.5%; and so far in FY11, 0.9%.

As Trocchio worked her way through the details of each greenbelt property, which included endowments, Hall and Ezekiel both indicated they felt it was very important that these endowments be kept up to date. There’s now a separate line item for the open space endowment fund balance, which currently stands at $390,000.

Boundary Issue

At its Nov. 10, 2010 meeting GAC had established a subcommittee to consider the question of whether to recommend an expansion of the greenbelt boundary – the area where the greenbelt millage can be used to acquire land or development rights to land. Since the millage was approved by voters in 2003, the boundary has been previously expanded on one occasion, in August 2007. [Previous Chronicle coverage: "Time to Change the Greenbelt Boundary?"]

GAC vice chair Dan Ezekiel, who’s leading the committee, was keen to stress at Wednesday’s meeting that GAC did not have the authority to expand the boundaries. That power rests with the city council. The issue came up at Wednesday’s meeting only in the context of a brief conversation about the scheduling of the subcommittee’s first meeting, which has not yet taken place. They’d planned to meeting the following day, Feb. 10, at 4:30 p.m. But Catherine Riseng told her colleagues that although she’d previously been available at that time, her schedule had changed.

Commission chair Jennifer Hall suggested that because this would be the first meeting, it might be good to go ahead and meet with the members who were available – “to get the ball rolling.” Ezekiel asked Riseng if she’d be willing to provide some input via email. Peg Kohring, of The Conservation Fund, told commissioners that it would not be an easy conversation.

When it became apparent that some of the communication about the meeting and the materials related to it had been sent only to a subset of commissioners, Hall asked that communication about future meetings be addressed to all commissioners. Riseng ventured that she thought the subcommittee was, in any case, a committee of the whole. Hall responded by saying she thought it was a committee of the all-who-are-willing.

Present: Dan Ezekiel, Mike Garfield, Jennifer S. Hall, Carsten Hohnke, Catherine Riseng, Laura Rubin, Gil Omenn

Absent: Peter Allen, Tom Bloomer

Next meeting: Wednesday, March 9 at 4:30 p.m. at the Washtenaw County administration building, 220 N. Main, Ann Arbor. [confirm date]

From left to right: DDA board members Gary Boren, Roger Hewitt, John Hieftje, and Keith Orr. (Photos by the writer.)

In their one business item, the board approved an amendment to the contract with Village Green to develop a 244-space parking deck as the first two stories of a 9-story, 99-foot-tall building, City Apartments – a 156-unit residential planned unit development (PUD) at First and Washington.

Once the parking deck portion of the building is completed and issued a certificate of occupancy, the city of Ann Arbor has agreed to issue $9 million worth of bonds to purchase the deck, and the DDA has agreed to make the payments on those bonds. The amendment to the contract provides DDA consultants access to the site during construction activities to check that construction methods conform to standards that will ensure a 75-year life for the deck.

On the city council’s agenda for Monday, Feb. 7, 2011 is their own approval of the same amendment to the Village Green contract. The contract amendment is part of a timeline put in place on Aug. 5, 2010, when the city council approved an extension of Village Green’s option to purchase the First and Washington city-owned parcel for $3 million. That timeline calls for Village Green to purchase the land by June 1, 2011.

The $3 million proceeds from the hoped-for Village Green deal were part of the financing plan for the city’s new municipal center, and would have no direct impact on the current general fund’s $2.4 million deficit that’s forecast for the FY 2012 budget. However, during deliberations some DDA board members accepted the point made by their colleague Newcombe Clark – that there are likely indirect connections between the completion of the Village Green transaction and the city’s overall budget picture, at least in terms of cash flow.

In reports and communications entertained by the board, highlights included: (1) a continued interest on the part of the University of Michigan to absorb a segment of Monroe Street into the UM Law School campus; (2) complaints from the property manager at 416 Huron St. about disrepair of an alley and adjoining sidewalks in the area, as well as a lack of maintenance on property owned by the railroad; and (3) an elaboration by the mayor on some remarks about Borders that he’d made and that had been reported in the media.

Village Green

The board considered a resolution to approve an amendment to the contract between Village Green, the DDA and the city of Ann Arbor, under which terms Village Green will build a 244-space parking deck as the first two stories of a 9-story, 99-foot-tall building with 156 dwelling units: City Apartments.  The amendment to the contract, among other items, provides DDA consultants access to the site during construction activities to ensure that construction methods conform to standards that will ensure a 75-year life for the deck.

Village Green: Background

The parking deck under City Apartments would be owned by the city of Ann Arbor and managed by the DDA. Here’s how that would work: Once the parking deck portion of the building is completed and issued a certificate of occupancy, the city of Ann Arbor has agreed to issue $9 million worth of bonds to purchase the deck, and the DDA has agreed to make the payments on those bonds.

The city council authorized the issuance of the bonds at its Oct. 4, 2010 meeting, but the city will not actually issue them until construction of the deck is complete and a certificate of occupancy is issued for it. [After the DDA's bricks and money committee meeting on Jan. 26, 2011, Susan Pollay, executive director of the DDA, clarified for The Chronicle that the certificate of occupancy refers just to the parking deck – it will be completed before the apartments are ready for occupants to move in. Issuing the certificate of occupancy will be contingent on the parking area being safe for motorists to park their cars while construction continues on the upper floors.]

The timing of the bond issuance was part of the council’s deliberations at its Oct. 4, 2010 meeting:

Stephen Kunselman (Ward 3) led off deliberations by expressing his concern about what happens to the bond if the deck does not get built. The city’s CFO, Tom Crawford, explained that the payment is not owed until there is a certificate of occupancy issued for the City Apartments project, and thus the bonds would not be issued until the project was substantively complete. Crawford allowed for some flexibility in that respect, if the city saw that it could get a better interest rate by issuing the bonds a few months before the project is actually complete.

Based on the timeline approved by the council in connection with the extension of the purchase option, Crawford said, the project is supposed to be built by around May 2012.

By way of background, the City Apartments planned unit development (PUD) won city council approval on Dec. 1, 2008. Village Green had an option to purchase the land parcel at First and Washington, where City Apartments is planned, which was good through May 31, 2009, but was extended by the city council at its May 18, 2009 meeting through Dec. 3, 2009 – with the possibility of two three-month extensions that could be authorized by the city administrator. The reason given for the extension was to allow time for Village Green to arrange financing. Both additional extensions were granted by city administrator Roger Fraser, which gave Village Green a purchase option through June 1, 2010 2011.

But at its June 21, 2010 meeting, the city council approved an additional brief extension through Aug. 5, 2010 in order to allow time to establish a specific set of milestones that need to be completed. Then, at its Aug. 5, 2010 meeting, the council approved another extension to the purchase option through June 1, 2011. A detailed set of milestones was included as part of the resolution, which were intended to increase the probability that a purchase took place before the option ran out.

After the city council extended Village Green’s option to purchase the land, DDA board member Newcombe Clark had noted that the milestones that had been developed generally left little time for review by the DDA. From The Chronicle’s Sept. 1, 2010 DDA board meeting report:

Clark picked up on the fact that the turnaround time for DDA activities and involvement were all relatively short – in many cases a day. He suggested that the DDA “politely ask” that it be kept in the loop on those matters.

The amendment to the Village Green contract that was before the DDA board on Wednesday was part of the timeline of milestones. So where on the set of milestones did the amendment fall? It called for the DDA board to vote on the amendment on Nov. 3, 2010 – around three months earlier. The same amendment is on the city council’s agenda for Feb. 7, 2011.

By way of additional background, the $3 million transaction for the land parcel at First and Washington is part of the city’s financing plan for the new municipal center that is very close to completing construction. The city’s contingency strategy for dealing with the possibility that the deal doesn’t go through was discussed at a budget workshop last year:

City Budget: Debt

Sandi Smith (Ward 1) was puzzled by a line in the budget summary that reads “Loan payment for First and Washington – $150,000,” noting that she did not think the city owed any money on the property.

[City administrator Roger] Fraser allowed that Smith was correct – the city does not owe money on the property. However, the city is expecting $3 million from the sale of the property in connection with Village Green’s City Apartments project, which has site plan approval from the city, but has not moved forward yet due to lack of financing.

Fraser described the $150,000 as a contingency of sorts, borrowing some money to “tide us over” if the $3 million from the sale of that First & Washington property does not come through sometime soon. The option to purchase agreement has been extended once by city council through December 2009, with a provision that the city administrator can authorize two 3-month extensions, which he has done. When the second extension runs out at the end of June 2010, the council will need to act if there is to be an additional extension.

At the council’s Monday budget meeting, the city’s CFO, Tom Crawford, indicated that he’d had recent conversations with Village Green and that they were feeling positive.

Mayor John Hieftje asked Crawford to confirm that the city was within its legal limit for debt load – the city cannot have debt in excess of 10% of the total state equalized value of property. Crawford indicated that the city was at 2.6%, and he thus felt comfortable with the city’s debt level. Crawford also cited other cities’ debt load – Grand Rapids, Lansing and Kalamazoo – as comparable. Ann Arbor’s bond rating, said Crawford, was in the top 20 in the state.

This past week, Crawford confirmed by email for The Chronicle that no money had been borrowed as a part of that contingency strategy and that if any were to be borrowed, it would need to receive approval from the city council.

Village Green: Board Deliberations

Roger Hewitt reminded the board of the project’s background, highlighting the fact that the DDA would be purchasing the deck based on a fixed amount per parking space. He noted that the DDA board had already approved a contract and what was before the board was an amendment. The language of the amendment, Hewitt said, was meant to ensure that the 75-year life of the parking deck is reflected in the construction methods. He said there are a number of engineering and construction concerns that are addressed in the contract amendment, helping ensure that the DDA is “getting what we are paying for.”

Hewitt told the board that the language had been reviewed by Carl Walker Inc., the DDA’s engineering consultant for the parking structures it manages for the city, as well as by Jerry Lax, the DDA’s legal counsel. He declared his confidence that the DDA would be getting a deck with a 75-year life.

Susan Pollay, executive director of the DDA, stressed that Village Green’s interest in quality construction is aligned with the DDA’s interest. Village Green’s intent, she said, is not to sell the building but to continue to own and operate the apartment building. So constructing a deck of sufficient quality that will last 75 years is important to Village Green, she said, because the parking deck is effectively the basement of the apartment complex they will own and operate.

[At the DDA's bricks and money committee meeting the week before, Pollay had reported the possibility of increasing the building height by a few feet, to avoid the need to dewater the site during construction of the foundations. She said that Kevin McDonald, in the city attorney's office, was looking at the issue to determine whether that change to the building plan could be made at the administrative level, or if it would need to return to the city council for approval.]

Before the meeting started, Newcombe Clark had said he was not trying to be negative about the Village Green amendment. He did, however, want to draw out a number of points.

In deliberations, he reviewed with Pollay that the DDA would be managing the deck and that the city would own it. Hewitt further clarified that the DDA would manage the City Apartments deck in the same way it manages any other city-owned parking structure. Pollay offered Liberty Square as an example of how the arrangement would be handled – the city owns the deck and the rest of the structure is owned privately. Hewitt noted that the private space and public space are flip-flopped in Liberty Square, as compared to City Apartments – in Liberty Square, the private component is at the bottom of the building.

Clark stated that he was happy the project was now moving forward. He had concerns, however, about how the milestone timeline would be kept. He wondered what the impact would be of not keeping to the schedule and how that relates to the DDA’s 10-year plan. He noted that they were nine weeks behind schedule. [Based on the original Nov. 3, 2010 schedule for the vote, Clark was understating the delay by a few weeks. Queried by email, Clark joked to The Chronicle that this was perhaps the first time he'd ever been accused of understating something.]

Clark said he understood that hard work was being done to make up the time they were behind, but he worried that the bond issuance was scheduled to take place 12 days from then. He said he didn’t think that the DDA was ready for bonds to be issued. Pollay clarified that it’s the city that will be issuing the bonds, and that will not take place until the parking deck’s certificate of occupancy is issued. That’s when it becomes real, she said. And the city council has already authorized issuance of the bonds, she explained.

Clark moved on to the timeline item indicating that the construction documents are supposed to be 100% complete within three weeks. Pollay indicated that this part had been modified – construction specifications would be provided in early March and they would be able to approve any changes through June. Pollay indicated that Village Green is hoping to begin construction in July.

Clark then noted that the closing on the $3 million deal comes very close to the point when the city needs to finalize its annual budget. He expressed concern about the impact of a deal not going through on the city’s current budget. He allowed that the $3 million of proceeds from Village Green’s purchase of the parcel is slated to go into the fund that is paying for the new municipal center, which is nearing completion. But he noted that “money is money,” saying that a $3 million hole somewhere has to be plugged with something, which would leave a hole somewhere else. [The city's eventual strategy, if it becomes necessary due to the Village Green deal not going through, as reviewed in the background above, is to borrow the money in some form.]

Clark reiterated that he supported the project and said he hoped that Village Green would build the project. But he returned to his concern about the timeline not being met. He said the DDA kept moving things around in its 10-year financial plan, so he felt like he’d have a better idea of what the DDA’s 10-year plan will actually be in a month or two from now.

[If the Village Green project does not go through, it means that the DDA would be relieved of a $9 million obligation to make bond payments for the deck purchase. So Clark appeared to be putting the discussion in the general context of the still-unresolved parking contract negotiations between the city and the DDA. The city's budget planning currently assumes a $2 million payment from the DDA to the city that is not part of the current parking contract. As the negotiations have reached a critical point, some DDA board members have begun to express concerns about the DDA's ability to satisfy the city's desire to supplement its general fund. Some board members are also concerned about the DDA's own ability to complete specific projects they view as part of the DDA's mission.]

With respect to the Village Green timeline, Hewitt characterized it as the “city’s negotiating timeline, not the DDA’s timeline.” Any timing issue, Hewitt told Clark, is the city’s issue, not the DDA’s. Clark wondered if it weren’t the same issue. Hewitt ventured that the discussion seemed to be getting into a “larger realm,” and Clark replied that this was exactly his concern – that the larger issues were getting mixed into the discussion due to the compressed timeline.

Hewitt came back to the point that the DDA does not need to make any payments until the parking deck has a certificate of occupancy. That’s several years away, he said. Hewitt said that construction would typically be two years for something like this. As far as the larger issue of the city’s budget, he said, he didn’t feel it was their place to comment.

Russ Collins provided a way out of the conversation between Clark and Hewitt by telling Clark: “Point noted.” But he continued by saying, “The issues you’re raising don’t affect the material facts of this resolution.” It could affect the city’s cash flow, Collins allowed, which could in turn affect indirectly what the DDA was talking about.

Bob Guenzel sought clarification that it was a cash-flow issue and not a budget issue for the city. Clark indicated that it was a one-time payment for the sale of an asset. Guenzel supposed that the city had recorded the transaction as a receivable, but Clark said there was no actual purchase agreement yet. That is, Village Green has not yet executed their option. If there was already an agreement to purchase or Village Green had already purchased the land, Clark said he’d feel more comfortable about possibly needing to change the DDA’s budget, given that the city already has the $3 million budgeted.

Guenzel wrapped up the deliberations by saying, “As Russ said, it’s a point.”

Outcome: The board voted unanimously to approve the Village Green contract amendment. The city council will vote on the same amendment at its Feb. 7, 2011 meeting.

Communications, Committee Reports, Commentary

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council. Every board meeting includes two opportunities for public commentary – one near the start of the meeting and the other at its conclusion.

Comm/Comm: Bricks

John Splitt reported out from the bricks part of the bricks and money committee, saying that concrete continued to be poured for the underground parking garage under construction on the city-owned Library Lot on South Fifth Avenue. A total of 3,000 cubic yards of concrete had been poured this month, Splitt reported. The largest mass pour of the project, he said, is due to take place in late February and will involve 5,000 cubic yards. The speed ramp on the east side of the garage is 80% complete, he reported, which will ease the construction workers access to the bottom of the construction pit.

The Fifth and Division streetscape improvement project has been shut down for the winter, but wiring of streetlights in connection with that project does continue, Splitt said.

He also announced that immediately following the meeting there would be a tour of potential different space for the DDA offices for anyone who was interested – next door at the City Center building, at the southwest corner of Huron and Fifth.

Comm/Comm: Money

Roger Hewitt reported on the second quarter financial picture for the period ending Dec. 31, 2010 or midway through the fiscal year. Highlights of Hewitt’s remarks included the fact that the DDA had received from the city nearly all of the taxes it captures through the TIF (tax increment financing) district, and those amounts are within 2% of what had been budgeted.

Hewitt also noted that reduced operational costs in the parking fund reflected the efforts of Republic Parking manager Mark Lyons to reduce costs. A drop in parking revenue compared to the budgeted amount, said Hewitt, reflected a delay from July to September in the implementation of a parking fee increase.

Hewitt also pointed out that the transfer into the parking maintenance fund will be less, because the DDA had requested of its parking structure engineering consultant, Carl Walker Inc., that time-sensitive priorities be identified. No critical maintenance would be delayed, he said. Only those activities that were more appearance-related – like painting, for example – would be delayed. Deck-coating or resurfacing, he said, would not be put off.

With respect to the quarterly parking figures, Hewitt concluded that usage continued to appear stable.

Comm/Comm: Partnerships

The partnerships committee meeting report was given by Russ Collins. Part of his report consisted of a report on the status of the DDA’s energy-saving grant program, a two-phase program that allows downtown businesses to conduct an energy audit, paid by the DDA, and to install improvements based on the audit, the cost of which is matched up to a $20,000 cap.

[At the partnerships meeting from the previous month, which The Chronicle attended, DDA executive director Susan Pollay stressed that the DDA had not spent more than was in the budget for the energy grant program – a conclusion that could have erroneously been reached by looking at the total that the DDA would spend, if every participant in the program installed improvements that resulted in the maximum $20,000 match, and if the DDA decided to match the expenditure. At the partnerships meeting, Pollay stressed that it was a "first in" program.]

Collins also reported that the PACE program, which the state legislature passed late last year, could be complementary to the DDA’s energy-saving grant program.

Collins also indicated that the DDA’s mutually beneficial committee had reported to the partnerships committee how the city council had reacted to the outcome of the DDA board retreat – when there’d been a board consensus that the percentage-of-gross figure the board wanted to consider as payment to the city was a few points lower than the city was hoping for. [Chronicle coverage: "Parking Money for City Budget Still Unclear"]

Collins also reported that there’d been discussion of the new role for the DDA in redeveloping downtown city-owned surface parking lots. Wendy Rampson, head of planning for the city of Ann Arbor, will be attending the next partnerships committee meeting – on Wednesday, Feb. 9 at 9 a.m. – to discuss how the new A2D2 design guidelines will be integrated into the city’s planning-related code. City staff has been asked to bring a map showing the specific parcels to be redeveloped. [At the council's Jan. 18, 2011 meeting, councilmembers deliberated on a resolution that would have articulated this DDA role in redevelopment of the surface lots. Some councilmembers mentioned the lack of a map identifying the parcels as one barrier to their adoption of the resolution – which was ultimately postponed. Chronicle coverage: "DDA-City Deal Stalls" and "Ann Arbor Hotel First to Get Design Review?"]

Comm/Comm: Economic Development and Communications – SPARK

Joan Lowenstein gave the report from the economic development and communications committee. At their meeting, Lowenstein reported, they’d reviewed existing communications efforts about the downtown and the DDA. That had established a context, she said, for exploring different kinds of communication that the DDA could pursue in partnership with others, or in identifying gaps that the DDA could fill.

She reported that Newcombe Clark had walked the committee through a plan from his current course of study at the UM business school, that had provided a good jumping off point for the discussion. A goal that the committee identified, said Lowenstein, is to focus communication on the many positive assets that downtown has to offer. So the DDA would need to identify its role in that communication. That could range from communicating about downtown assets to residents, visitors and employees, to communicating about the DDA itself.

Lowenstein said that Jennifer Owens, vice president of business development for Ann Arbor SPARK, would attend the next meeting of the committee on Feb. 23, 2011 to explore how SPARK and the DDA could align their efforts. [Committee meetings are open to the public and posted online on the DDA's calendar.]

John Mouat wondered what the impact on SPARK would be with key personnel departing for Lansing. He was referring Gov. Rick Snyder’s recent appointment of SPARK’s CEO Michael Finney and SPARK’s director of marketing and communications Elizabeth Parkinson to positions in the Michigan Economic Development Corp. (MEDC). Amy Cell SPARK’s vice president for talent enhancement, is also joining the MEDC.

Lowenstein said she felt that the SPARK positions would be replaced, and that it reflected greater interest in collaboration between the MEDC and SPARK, with perhaps some kind of “satellite MEDCs” being established. If anything, she concluded, SPARK’s role will increase rather than decrease. Bob Guenzel, who serves on SPARK’s board of directors, said that his understanding was that SPARK would be moving forward as before. Mayor John Hieftje, who also serves on SPARK’s board of directors, said there is an evolving discussion of the relationship between MEDC and various economic development groups like SPARK, and it was somewhat “in flux.” He said he had a lot of faith in Finney.

Comm/Comm: Transportation

Reporting out from the transportation committee was John Mouat, who said they’d spent their last meeting selecting items from the transportation demand management plan for discussion: (1) providing transportation and evening parking information for evening employees; (2) adding moped/motorcycle parking downtown; and (3) thinking of parking spaces as serving a variety of different uses, from electric vehicle spaces to taxi service.

Mouat also called the board’s attention to the committee’s work as it relates to the Ann Arbor Transportation Authority: the AATA’s 30-year transportation master planning effort; the Plymouth-State connector study; the possibility of making the downtown Blake Transit Center (BTC) on Fourth Avenue more of a multi-modal facility; and encouraging the use of the BTC as a hub for MegaBus, University of Michigan blue buses, Michigan Flyer, and Greyhound.

On a lighthearted note, Mouat reported on a conversation that an alternative transportation option, given the snowfall, might be dog sleds, which could, according to Susan Pollay, result in a need for barking structures. Collins ventured that the whole notion was a howling success.

Comm/Comm: Alley on the Edge

Bill Gross, property manager for 416 W. Huron, addressed the board during public commentary about a range of concerns related to the property – which sits just west of the railroad bridge and just east of the new HAWK traffic signal, across the street from the new YMCA building.

Huron Street runs east and west. This is the western edge of the DDA tax capture district. The view here is to the northeast, just west of the railroad tracks. From left to right: Ann Arbor School of Yoga, 416 W. Huron property, Delonis Center.

Some Chronicle readers may recognize Gross and the Huron Street property from the Art in the Barn holiday art show that Gross organizes in the yellow barn, located behind the painted gray brick building that fronts Huron Street.

Gross advised the board that he took care of the the property along the railroad tracks, which is actually the railroad’s responsibility – picking up trash and mowing the grass, he said. If he didn’t do it, nobody would, he told them. Referring to the walk-arounds in the downtown area that the board sometimes did, he asked them to tell him when they were coming – he’d make sure not to mow, so that they could see what it would look like if he didn’t take care of the property.

Gross also pointed out that the sidewalks along the street are in disrepair – they are tilted and exacerbate the standing water problems that are prevalent in the public alley between the 416 W. Huron building and the Ann Arbor School of Yoga building located just to the west.

Gross also raised concerns about behavior issues with people he said were residents of the Delonis Center homeless shelter, located slightly up the hill from the 416 W. Huron property, past the railroad bridge. He described an incident when someone was standing on the railroad track yelling and the response he received from the police when he called was that he was asked to keep an eye on that person.

[In a followup phone interview after the board meeting, Susan Pollay told The Chronicle that the alley was one of those that the DDA had not yet repaired – they'd done an inventory of alleys in the downtown area and had undertaken improvements in many of them to ensure that stormwater drains were reconstructed and that the downspouts from buildings fed properly into the stormwater drain system. The sidewalks, she said, had been slated to be repaired as part of Huron Street improvements that had been planned by the DDA.

Those improvements had originally been conceived after the "decade of parking structure repair" in the 1990s, when the DDA board had identified three key corridors as a next priority to focus on: Huron Street, Fifth Avenue and Division Street. Because Huron Street is a state trunk line, which requires coordination with the Michigan Dept. of Transportation (MDOT), it was treated separately, she said. The Fifth and Division streetscape improvement project – much of which was done this past summer, and which will be completed next spring – is the result of that strategy.

Where do the street and alley improvements stand as DDA projects? Huron Street improvements are still on the list of possible projects for the DDA to undertake. At the DDA's most recent retreat, board member Newcombe Clark ensured that Huron Street was one of the items board members could vote for during their dot-voting exercise. As part of that exercise, finishing the alley improvements received two board members' votes as short-term priorities.]

When board members began a back-and-forth with Gross, board chair Joan Lowenstein noted that it was not the board’s practice to engage in that kind of discussion, but she felt that some leeway was warranted.

Mayor John Hieftje suggested that Gross take up the behavior issues with the Delonis Center staff. Gross said he’d gotten only lip service from the shelter, but also that it’s difficult for shelter staff to see down the hill past the railroad bridge to the property he manages.

Russ Collins suggested that it was the DDA staff – not the board – that would be in a better position to address Gross’ concerns.

Clark then stated that he was biased because his mother owns the Ann Arbor School of Yoga, immediately adjacent to the 416 W. Huron property – the two buildings share the alley in question. But he went on to point out that the behavioral issues are difficult to address without officers assigned to a particular beat – Clark has often advocated for exploring the possibility of bringing back police beat patrols to the downtown area. He described how the alley flooding and the sidewalk improvements were part of projects that the DDA had planned for its district. “It’s still our district,” he pointed out. Board approval was necessary in order to finish those projects, he observed.

And that is the reason Gross was there before the board, Clark said: Gross had come to him and Clark had told him to come address the board. “The buck has stopped with us at this point. … We can choose in our priorities whether or not we want to address this.”

Comm/Comm: Downtown Citizens Advisory Council – Monroe Street

Ray Detter reported out from the previous evening’s downtown citizens advisory council meeting that Richard DeVarti, owner of Dominick’s on Monroe Street, had attended the meeting along with his brother Dave, a former DDA board member. They were again concerned about the possibility of the city allowing the University of Michigan to absorb a section of Monroe Street into the law school campus. Detter said the CAC saw no benefit to the city in allowing that move, citing the loss of street parking, not just for Dominick’s but also for the multi-family residential units in the area. Detter said it would be a disaster for Dominick’s business. [Previous Chronicle coverage: "UM Pitches Plan to Close Monroe Street" and "Expansion of Campus onto Monroe Street?"]

Comm/Comm: Streetlight Outage Reporting, Greenway

Ray Fullerton addressed the board on the subject of reporting streetlight outages. He noted that it is important for residents to report them, because the city itself only does an annual inspection and it could take as long as a year for a streetlight to get replaced.

Fullerton also noted that in connection with the current Parks & Recreation Open Space (PROS) plan adoption process, it had been reported that the DDA felt the possibilities for extending a greenway southward towards the UM athletic campus were not as great as in the other direction. He said that there was definitely the possibility of pathways to the south.

Comm/Comm: Downtown Marketing Task Force

Mayor John Hieftje said the downtown marketing task force, which had been meeting for a number of years, is currently on hiatus. The task force meetings are an opportunity to bring together members of the downtown business associations, he said, along with councilmembers. He noted that Margie Teall (Ward 4), Tony Derezinski (Ward 2) as well as Carsten Hohnke (Ward 5) had attended the task force meetings regularly along with him, the mayor – Hieftje pointed out that the name of the task force is actually the Mayor’s Downtown Marketing Task Force and has been around for a very long time.

They’d been thinking about how to recast the task force, possibly reducing the frequency of meetings to a quarterly basis. He made a pitch to DDA board members to attend the task force meetings, saying that there are interesting conversations that take place between people who are actually doing things. Hieftje said that while Susan Pollay, the DDA’s executive director, was nearly always present at the task force meetings, he felt the task force’s effectiveness was limited due to the lack of attendance from board members. It could be an enlightening conversation, he concluded.

Comm/Comm: Comments on Borders Clarified

Mayor John Hieftje announced that he had been quoted in the media a couple of weeks ago when he’d been asked by a couple of different news outlets about Borders Group, the Ann Arbor-based bookstore chain. Borders, he continued, was a concern due to reports of a possible bankruptcy and what might happen in the wake of that. [The mayor was quoted in a Jan. 9, 2011 Crain's Detroit Business article by Daniel Duggan as follows: "If the company were to fold altogether, the biggest blow to the city would be the big hole in the downtown," Hieftje said. "While it would be disappointing, the downtown market has been hot and I wouldn't be surprised to see that retail space snapped up."]

After he was quoted, the mayor reported, he had an appointment with the person who handled Borders’ real estate, and they had both acknowledged that it was unlikely that Borders would close its stores. If Borders did close stores, then the downtown Ann Arbor store would be one of the last to close, Hieftje ventured. Hieftje continued by saying that the person he’d talked with was opening up channels to explore ways to fill the retail space if the need came up.

One of the principle concerns that had been expressed, Hieftje said, was a perceived lack of parking. What they’d heard from other retailers is that it’s a great spot, but they wondered if there was sufficient parking. Hieftje went on to say that he’d pointed out that the new underground parking garage under construction on South Fifth Avenue would provide additional spaces, and that the person he’d spoken with was happy to hear that. The last thing he’d like to see, concluded Hieftje, is for Borders to move.

Present: Gary Boren, Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat

Absent: Sandi Smith, Leah Gunn

Next board meeting: Noon on Wednesday, March 2, 2011 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]