Mary Jo Callan, director of Washtenaw County’s office of community and economic development, explained to the DDA board what the affordable housing needs assessment would entail. The board voted to approve $37,500 for the study. (Photos by the writer.)

One was a $37,500 grant from the DDA’s housing fund to help pay for an affordable housing needs assessment to be conducted by Washtenaw County’s office of community and economic development. The other was a routine end-of-year budget adjustment that included the $37,000 grant as well as $500,000 of previous allocations made to the Ann Arbor Housing Commission, and a $1.6 million payment for the First & Washington parking garage that was made out of this year’s budget instead of the previous year’s budget.

In other voting business, the board approved up to $125,000 for the redesign and reconstruction of the public sidewalk in front of the Ann Arbor District Library’s downtown location on Fifth Avenue. That money will come from next year’s (FY 2015) budget, starting July 1. The project will eliminate the step up immediately adjacent from the curb, which was installed as a result of the streetscape changes the DDA undertook during construction of the Library Lane underground parking garage in 2012. The sidewalk project will be incorporated into an AADL project that will substantially renovate the front entrance to the building.

The final item of voting business considered by the board was adoption of a policy for DDA grants to private developments. The policy establishes criteria for eligibility – which include public benefit to property outside the development. The policy also covers limits on the amount of funding, which is a portion of the additional TIF revenue generated by a project.

A resolution that had been postponed at the board’s May 7, 2014 meeting until the June 4 meeting did not receive any board action – a request to pay about $100,000 for the conversion of streetlights in the DDA district to LED technology. The board did not vote on the item. It did not appear on the board’s agenda as a resolution, but only as an update. That update consisted of remarks from executive director of the DDA Susan Pollay. She informed board members that as a result of conversations she’d had with city staff, they should consider the item tabled, but that the request might be brought back in the future.

The board also received its usual range of updates and reports from committees.

Affordable Housing Needs Study

The board considered allocating $37,500 for a housing needs assessment in Washtenaw County to be conducted by the county’s office of community and economic development. The total budget for the project is $150,000.

The firm selected by the county’s office of community and economic development (OCED) to do the needs assessment is czb LLC out of Virginia. [.pdf of RFP for the needs assessment] The current needs assessment will update a report done in 2007.

According to a memo from OCED staff to the DDA, the final report will “provide a clear, easy to understand assessment of the local housing market, identify current and future housing needs, and provide specific and implementable policy recommendations to advance affordable housing. The goal for this update is to include an analysis that links transportation cost and accessibility, as well as other environmental and quality of life issues to the location of affordable housing.”

The RFP for the needs study describes the timeline for the work as including a draft for review due at the end of October 2014, with a final presentation due in mid-December.

In addition to the DDA grant, money to cover the complete cost of the study will also come from a HUD Sustainable Communities Grant ($75,000) and a possible contribution recommended by the city of Ann Arbor’s housing and human services advisory board (HHSAB). The board is advisory, so the actual appropriation – from the city’s affordable housing trust fund – would need to be approved by the city council. That approval is scheduled to appear on the council’s June 16 meeting agenda.

In 2005, the DDA board voted to approve $15,000 for the housing needs assessment that the county undertook around that time.

Affordable Housing Needs Study: Board Deliberations

Joan Lowenstein introduced the resolution on grant funding for the housing needs assessment. The DDA is being asked to contribute $37,500 to support the affordable housing needs assessment, she said. The study would be useful to the DDA as well as to all the other governmental units, she said – because they would then not be operating “in the dark.” When they are asked to provide support for affordable housing, they would know what the needs actually are. They would not then have to put money into a pot without knowing what that pot of money would eventually support. The study would establish what the housing needs are in the community, she said.

Lowenstein continued by saying that this report would also consider workforce housing. When affordable housing is discussed in this community, she continued, people often think of below-poverty kind of housing, but this study will also be looking at workforce housing. Lowenstein invited Mary Jo Callan, director of Washtenaw County’s office of community and economic development, to the podium to briefly describe the study.

Callan described this current study as an update of a previous needs assessment. Following up on Lowenstein’s comments about workforce housing, she allowed that it was important to include a range of different affordable housing types. Affordability varies, depending on income, she said, and it’s important to include the workforce strata.

A consultant has been retained to do the study, Callan reported. The consultant was chosen because of his familiarity generally with doing affordable housing assessments – and understanding how markets work – and specifically for that type of analysis in college towns. That’s important for Ann Arbor, as a college town, she said. She expected it to be a significant undertaking – with lots of community engagement, lots of meetings and focus groups with stakeholders. The final report would be done in the fall, she said.

As Lowenstein had pointed out, Callan added, we know we need affordable housing – but it’s important to put some numbers on that. How much? For whom? Located where? She noted that she works for Washtenaw County, but each community in the county has particular needs with respect to affordable housing. The report will highlight some specific areas, she said. One of those specific areas will be the Ann Arbor DDA district. The city of Ann Arbor will also be a specific area focused on in the report. Ypsilanti and Pittsfield Township will also be highlighted as communities with specialized needs.

The study will also include an analysis of transportation as it relates to affordable housing, Callan continued. Access to transportation is critical. Affordable housing is great, she said, but it is only great if it provides access to jobs and other needs. The previous study had not included consideration of how transit affects affordable housing, Callan said.

John Mouat highlighted the fact that out of a budget of $150,000, the Ann Arbor DDA was a 25% stakeholder. Half of the amount would be provided by the HUD sustainable communities grant. And another quarter of the amount would be provided through the city’s housing and human services advisory board, he said. He also stressed the fact that the amount is an “up to” amount.

Callan agreed that it was an “up to” amount – which was important for the DDA board to know. She continued by saying that the $75,000 from the HUD sustainable communities planning grant would definitely be used for the study. And the cost of the entire study is currently pegged at about $92,000. However, she expects – as with any major community undertaking – additional components of the study could be added, including additional outreach and engagement. So while the amount is an “up to” amount, she aims to bring the study in under that amount.

Responding to a question from Lowenstein, Callan described the timeline as starting immediately as far as engaging with the consultant. The community engagement process would start very soon, she said. There would be a couple of major planned community engagement events, probably in September and October. She is shooting for the end of November for a final report, she said, but in any case by the end of the year it would be done.

Outcome: The board unanimously approved $37,500 for the affordable housing needs assessment.

Routine Budget Maintenance: FY 2014

The board considered routine annual budget adjustments totaling about $2 million. The amendments are typically made each year towards the end of the fiscal year to ensure that expenditures do not exceed appropriated amounts – in compliance with Public Act 621 of 197. The Ann Arbor city council undertook a similar action at its May 19, 2014 meeting.

The main part of the adjustment was a $1.6 million payment made for the First & Washington parking garage, which is part of the City Apartments project. The amount was budgeted for last year, but not paid until this year.

The rest of the adjustment was attributable to expenditures out of the housing fund – $500,000 of it to support Ann Arbor Housing Commission projects. The remaining $37,500 went to support a countywide housing needs assessment – an amount that was approved by the board in a separate vote.

The DDA will end the fiscal year with $6,167,757 in fund balance. The breakdown of that total is: TIF ($619,571); Housing ($160,154); Parking ($2,161,676) and Parking Maintenance ($3,226,356).

Routine Budget Maintenance: FY 2014 – Board Deliberations

Roger Hewitt introduced the item, saying that state law requires that the budget be amended so that expenses don’t exceed allocations in the budget. There were two areas in which the DDA has “overspent” this year, he explained. In the detail of the parking budget, he noted, there is a $1.6 million increase in the budget for the First & Washington parking structure.

DDA board member Roger Hewitt.

That’s the final cash payment for that structure, he noted. The reason the budget needs to be amended is that the expenditure had been budgeted for the previous fiscal year. The DDA could not make that payment until the certificate of occupancy for the parking garage had been issued. He described it as money that had not been spent last fiscal year and was being spent this fiscal year instead.

The other area where the DDA had “overspent” was in the housing fund, Hewitt said. After the budget had been set, there’d been a request from the Ann Arbor Housing Commission for several projects, he noted. Those projects totaled $500,000. Also a part of the mix was the $37,500 the board had approved at the same meeting for the affordable housing needs assessment study.

John Mouat drew out the fact that the Ann Arbor Housing Commission projects were at Baker Commons and Miller Manor, which are either in or near enough to downtown to fit the criteria the DDA applies for its housing fund investments.

Outcome: The board approved the fiscal year 2014 budget adjustments.

AADL Sidewalk Improvement

The board considered providing $125,000 of funding associated with a redesigned entrance to the Ann Arbor District Library on Fifth Avenue in downtown Ann Arbor. The money will be put toward the redesign and replacement of the public sidewalk along the east side of Fifth Avenue, between William Street and the entrance to the Library Lane parking structure.

The goal of the sidewalk redesign is to eliminate the step that was installed at the curb, when Fifth Avenue was regraded in connection with construction of the underground Library Lane parking structure, which was completed in the summer of 2012.

This is the step near the curb on the east side of Fifth Avenue in front of the downtown location of the Ann Arbor District Library. The step will be eliminated as part of a renovation project to the front entrance. The DDA will be funding up to $125,000 of the cost of the improvement to the public sidewalk.

At its most recent meeting, on May 19, 2014, the Ann Arbor District Library board authorized the library director, Josie Parker, to negotiate with Ann Arbor-based O’Neal Construction Inc. for work related to the downtown library entrance. O’Neal would be contracted to provide construction management services. This is the next step in a process that began several months ago, stemming from the need to replace the entrance doors.

At its April 21, 2014 meeting, the AADL board had authorized Parker to hire a construction manager for the project. At that meeting, trustees also allocated $18,580 from the fund balance to pay InForm Studio for construction documents. InForm Studio, the architecture firm that previously designed AADL’s Traverwood branch, gave an update on the process at that same meeting.

The existing teal porcelain panels that wrap around the front facade, part of architect Alden Dow’s original design from the mid-1950s, will be replaced with a “concrete skin” panel. The entrance will continue to be oriented to South Fifth Avenue, with new doors into the building. Leading from the front of the building into the vestibule will be two balanced double doors, which will be easier to open than the existing entry, and a single automatic door. A matching set of these doors will lead from the vestibule to the interior of the building. A heated sidewalk is proposed along the exterior edge of the steps.

The new design also will address accessibility concerns that have been raised by the public. Concerns about the grading and steps on the public sidewalk had been brought up as issues that affect accessibility.

The overall library entrance project is expected to cost about $250,000.

AADL Sidewalk Improvement: Board Deliberations

John Splitt introduced the item. He said when the DDA had built the Library Lane underground parking structure, Fifth Avenue had been regraded – something that needed to be done for water flow and drainage. The level of the street had been changed, and the difference in elevation had to be dealt with near the entrance to the Ann Arbor District Library. So that was dealt with by adding a step, Splitt said. That step has never been terribly convenient for anyone, he said. But now the library is renovating its front entrance. The DDA has been asked to get rid of that step, he continued, saying it was right that the DDA had been asked to do that.

The resolution that the board was considering would allow the DDA to pay for the part of the project that’s in the public right-of-way, Splitt explained. The DDA is not doing the work itself, he continued. The original amount considered by the committee was $100,000, he said, but in the course of committee discussion, they had increased the amount to $125,000 to accommodate any needed enhancements. In the long run, he felt, the cost would be less expensive than that, noting that it was an “up to” amount.

Roger Hewitt pointed out that the Ann Arbor District Library was one of the taxing authorities from which the DDA captures taxes.

Keith Orr supported the resolution, saying it is well within the DDA’s wheelhouse, as it involved infrastructure. Joan Lowenstein asked if the mechanical parking meters that are currently in place would be reinstalled, or if kiosks could be installed. Splitt said he assumed that the mechanical parking meters would be used for the time being.

Susan Pollay, executive director of the DDA, indicated that they are waiting to see what happens when the new Blake Transit Center opens – as the traffic flow will be reversed from what it was previously. When the center was located on the Fourth Avenue side of the block, buses entered from Fifth Avenue and exited onto Fourth Avenue. When the new driveway opens, expected in the next few weeks, buses will enter from Fourth Avenue and exit onto Fifth Avenue. It’s not clear how many of the parking spaces can remain, she said. Once more is known, then a decision can be made on the equipment, she said.

Splitt noted that the general strategy will be to replace the old-style meters.

Rishi Narayan asked, from a budget standpoint, if there was any consideration given to what projects this one might be replacing that already been budgeted for. Roger Hewitt responded to the question by saying that in a larger sense, the DDA has money allocated for sidewalk work. The DDA was holding off on decisions about where that sidewalk work might take place, until the streetscape framework plan is completed. Once that framework plan is in place, the DDA can begin to prioritize, he said.

Hewitt characterized the library sidewalk project as “jumping the queue” – although he said there really is not a queue of projects at this point. He summarized by telling Narayan that yes, there is money in the budget for this project, although it has not been allocated to specific projects. Money was not being taken away from some specific project.

John Mouat asked Splitt for some detail about the plans for the redesign of the library’s entrance: “How does the step magically disappear?” Pollay explained that the entire area in front of the library’s entrance is going to be recreated. Instead of the current two steps up into the entrance, there will be four steps, she said. That will allow the portion of the sidewalk that is near the street to be flat, she said. When the work was being done on the streetscape in connection with the underground garage construction, it was not possible to address that issue.

Mouat ventured that it was possible to view this sidewalk work as an unfinished phase of the reconstruction of Fifth Avenue. He indicated that when the step had been installed, everyone hoped that it would be a very temporary installation. Splitt summarized the results of the project as making the elevation change on library property and not in the public right-of-way.

Outcome: The board unanimously approved the $125,000 for the library sidewalk project.

Partnerships Grant Policy

The board considered a policy on granting financial support to private developments. [.pdf of DDA partnership grant policy]

The development of the policy was spurred by a request from First Martin Corp., which has asked the DDA to support its extended-stay hotel project at the corner of Ashley and Huron streets. That location is within the DDA district.

Highlights of the policy include a limit on the amount, keyed to the amount of tax increment finance (TIF) revenue the project will generate: “… calculated to be between 1% and 25% of the ten year TIF captured by the DDA from this project, with these funds to be directed to the cost of the public improvements agreed to by the DDA.”

Criteria for awarding grants include:

1. Addresses a documented gap in the marketplace or underserved markets of commerce within this sector of downtown.
2. Demonstrated that the project will act as a catalyst for additional revitalization of the area in which it is located which will trigger the creation of additional new tax revenue.
3. Is “connected” to the adjacent sidewalk with uses on the first floor that are showcased using large transparent windows and doorways to give pedestrians a point of interest to look at as they walk by the project.
4. Creates a large office floor plate.
5. Will facilitate the creation of a large number of new permanent jobs.
6. Is a mixed use development, that will encourage activity in the daytime, evening, and weekend, such as a development with a mix of commercial and residential.
7. Adds to downtown’s residential density.
8. Reuses vacant buildings, reuses historical buildings, and/or redevelops blighted property.
9. Number of affordable housing units created on site or funded by the project elsewhere in the community, which are beyond what is required by the city.
10. Environmental design is at or above a Gold LEED certification, or an equivalent environmental assessment.
11. Architecturally significant building or project design.
12. Strengthens Ann Arbor’s national visibility.

The grant policy considered on June 4 is similar to but distinct from a policy the board adopted at its June 6, 2012 meeting to cover brownfield grants – a policy that was spurred by the 618 S. Main project. [.pdf of brownfield policy]

Partnerships Grant Policy: Board Deliberations

Joan Lowenstein introduced the grant policy item on the agenda. The board has been discussing this for quite a long time, she said. She described the DDA grant program as “lying dormant” for a long period. The policy would structure how the DDA works with private developers, she said. Some guidelines need to exist, she explained, because it can’t be done simply “catch-as-catch-can.”

The policy sets out guidelines, based in part on the DDA’s brownfield grant policy. But Lowenstein stressed that this policy goes in a different direction from the brownfield grant policy. Specifically, this policy begins by asking the question: What can this developer do for us and our downtown and the rest of the community? So the policy incorporates criteria for how a developer can be eligible for grant support. More than just the developer’s own site has to be included in the benefit, she said. “In that sense it is a partnership, not simply a gift,” she said.

Amber Miller, the DDA’s planning and research specialist, was invited to comment by Lowenstein. Miller described two areas where she’d work on the policy with city staff. First, they had focused on the eligible improvements section of the policy. They’d identified opportunities for project elements that are not typically required of a site plan. Second, her work with city staff had also focused on the process by which the grants could be applied for. She noted that it would be helpful to have a grant application reviewed at the same time that city staff reviewed a project. That would be the perfect time for city staff to identify additional public improvement opportunities.

Roger Hewitt ventured that based on the wording of the policy, any residential project would qualify. Back-and-forth between Miller, board chair Sandi Smith, and John Mouat established that the inclusion of residential units was just one of many criteria for eligibility, and was not necessarily a sufficient criterion. Hewitt did not want every student housing project to qualify automatically. Lowenstein characterized the criteria as a “package.”

Mouat noted that the list of criteria was finite – and as the program continues for a number of years, it might be important to remove some items from the list or to add items. For example the need for large office floor-plate space was high right now, but after more of that type of space is built, it might not continue to be a priority.

DDA executive director Susan Pollay said the policy would be reviewed on an ongoing basis – as the city’s priorities change and as developments change. Mouat expressed concern that there might not be enough on the list to get developers interested. Pollay described how the DDA at one time had a façade improvement program – and the same concern had been registered at that point. Not much has been heard about the façade improvement program in the recent past, she continued, and that’s because there was no development interest. These DDA programs are not meant to supplant market forces – but rather are meant to be supportive of the DDA’s goals, she said.

Al McWilliams inquired about a limitation on the number of grants that could be awarded any given year. Smith explained that payment on any grant would be made only after the property owner had paid all the property taxes due. The grant would never be paid ahead of the taxes, she said. For that reason, she said it is not a typical rebate, but rather a grant based on the payment of taxes.

City administrator Steve Powers characterized the policy that was before the board as much improved over previous drafts. Lowenstein said it was helpful to have this policy coordinated with the city’s capital improvements plan – a change she felt was really helpful.

Outcome: The board unanimously approved the grants policy.

DTE LED Conversion

The board’s May 7, 2014 meeting included a resolution that asked the board to consider paying $101,733 to DTE for converting 212 mercury vapor and high-pressure sodium streetlights in downtown Ann Arbor to LED technology.

The board voted at that meeting to postpone a decision until its June 4, 2014 board meeting.

DTE LED Conversion: Background

In 2007, the DDA had previously granted $630,000 for conversion of 1,400 other streetlights in the DDA tax capture district.

Streetlight locations are mapped in the joint Washtenaw County and city of Ann Arbor GIS system. Data is available by clicking on icons includes ownership as well as the lighting technology used. This one is a high pressure sodium light operating at 400 watts.

The 212 streetlights that haven’t yet been converted are owned by DTE, which would be undertaking the work. Currently, the city pays DTE $72,585 a year for the energy used by the 212 streetlights. After conversion, the annual cost for the 212 lights is expected to drop to $51,895, for an annual savings of $20,690.

After an EO (energy optimization) rebate of $10,224, the $91,509 cost would be recovered in just under 4.5 years.

The project would include converting 100 watt MV (mercury vapor), 175 watt MV and 100 watt HPS (high pressure sodium) lights to 65 watt LED (light emitting diode). Further, 400 watt MV and 250 watt HPS lights would be converted to 135 watt LED. Finally, 1000 watt MV and 400 watt HPS lights would be converted to 280 watt LED.

DTE LED Conversion: June 4 Meeting

Susan Pollay, executive director of the DDA, told the board that at the previous month’s [May 7] meeting, she’d put forward a request to the board to consider a grant that would enable converting the remaining non-LED streetlights downtown to LED technology.

Some very valid points were raised by the board members, she said, which she’d taken back to a meeting with city staff. In that conversation, city staff had seen merit in both of the points. The first question concerned how the streetlight conversion project lines up with other priorities in the city’s capital improvements plan (CIP). About that, Pollay reported that “there was a lot of resonance for that question.”

The second question was how the streetlight conversion project lines up with the streetscape framework plan, which is not yet completed: “And that also had resonance with staff,” Pollay said. As part of the development of the streetlight framework plan, she said, we might decide as a community that the goal is to remove all of the cobra-head lights downtown – that we’d like to have all of downtown be lit with pedestrian-scale lighting, she said. And to make an investment at this point – before the DDA finishes that planning process – really didn’t make much sense, she continued.

Staff had “resonated with your questions,” Pollay told the board. So she’d put that board resolution on hold: “So effectively, that resolution you saw before, you should assume is tabled – not permanently, certainly, until after the framework plan,” she said. “If we feel it is important, we will bring it back.”

By way of additional background, in order to take advantage of this year’s funding cycle from DTE – which has a deadline of June 30 for application – the city’s energy office has developed a revised proposal for converting streetlights not in the DDA district. That proposal, to convert 223 mercury vapor lights to LED technology, is scheduled to be on the city council’s June 16, 2014 agenda. The net cost to the city for that conversion is $55,060, with an expected payback period to the general fund of 3.1 years.

Communications, Committee Reports

The board’s June 4 meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: Connector Study

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

The technical oversight committee had met the previous day, Hewitt said. They met with an expert on federal transportation administration (FTA) funding. The ultimate hope of the project, he continued, is that half of the construction funds will come from a federal grant. The expert had provided the committee with a lot of good ideas about how to request grant funding for the next phase of the project – which is the environmental impact study.

The expert had also provided ideas about how to request funding for the construction phase of the project, Hewitt reported. The expert had reviewed the projections of ridership 20 years into the future for this particular corridor, and characterized the numbers as “phenomenal,” Hewitt reported. This would easily be one of the top candidate projects for federal funding, as measured by the cost of the project compared to prospective ridership.

The expert had suggested that some FTA officials be invited to visit the city in the fall, when the University of Michigan students are back, because the FTA will not believe the numbers – they would have to see it for themselves. There’s a public meeting planned for Sept. 17, Hewitt reported. That will take place in the evening at the Ann Arbor District Library to bring the public up to date about the conclusions of the alternatives analysis.

Comm/Comm: Zoning Revisions

Reporting out from the downtown area citizens advisory council, Ray Detter said the group had reaffirmed its support for the city council’s decision to review the downtown zoning, to “correct mistakes that were made in the past.” He said that the previous month, some members of the citizens advisory council had spoken during public commentary at a recent meeting of the planning commission, which had voted unanimously to recommend a change in the zoning of the parcel on the southeast corner of Main and William streets – from D1 to D2. The CAC had supported that change, but had objected to another change associated with the same parcel – which allowed a height of up to 100 feet, instead of the 60 feet associated with other areas of the downtown that are zoned D2.

Detter said he believed that a “planned project” approach would be better than increasing the allowable by-right height in the zoning to 100 feet. Detter said the CAC supported the hiring of a competent urban planning professional to advise the city council and planning commission on ways to make decisions involved in shaping the final recommendations on zoning ordinance changes.

During communications time, Roger Hewitt responded to Detter’s comments made during the initial public commentary of the meeting, saying that past zoning is not necessarily a mistake – it could simply be a difference of opinion. A change in the zoning does not mean that the past zoning was a mistake, he stressed. It might mean that the views of the public have changed. Hewitt reminded everyone that he had served for three years on the A2D2 study committee, which resulted in the zoning changes adopted in 2009. So Hewitt objected to the outcome of those recommendations being referred to as a “mistake.”

Comm/Comm: Footing Drain Lawsuit

As part of his report from the downtown area citizens advisory council, Ray Detter said the group had spent some time discussing the status of the footing drain disconnection lawsuit that is currently pending against the city. The outcome of that lawsuit could affect the downtown area, he said. He reviewed how the lawsuit had recently been sent back to Washtenaw County’s 22nd circuit court from the federal court, over the objection of Ann Arbor city attorneys.

The footing drain disconnection ordinance, he continued, established a program under which property owners could be required to disconnect their footing drains from the city’s sanitary sewer system. The intent of the ordinance to diminish the risk of sanitary sewer overflows into the Huron River and sanitary sewage backups into homeowners’ basements.

Detter said he wouldn’t go into detail on the topic, but he summarized the essence of the lawsuit as involving inverse condemnation – the taking of private property without just compensation. If the lawsuit is decided against city, he continued, likely possibilities include the discontinuation of the footing drain disconnection ordinance and a discontinuation of the developer offset mitigation program. The developer offset mitigation program applies to every new development. Without that program in place, Ann Arbor’s sanitary sewer system would, he contended, be closed to new development.

The issue of inadequate sewage infrastructure in the city would have to be addressed, he said. If projects like 413 E. Huron are not able to mitigate sanitary in-flow, those projects would have to construct above-ground storage, he ventured. It could also have an impact on the University of Michigan’s new graduate dormitory, he said. The dorm is being constructed at the site of the former Blimpy Burger at Packard & Division.

Comm/Comm: Streetscape Framework Plan

John Mouat reported on a number of upcoming events related to the streetscape framework study. There will be a committee meeting on Tuesday, June 10 at 9 a.m. at the DDA offices. [At its Nov. 6, 2013 meeting, the board had authorized the consulting contract SmithGroupJJR and Nelson\Nygaard to manage the project.] There will also be a public meeting on June 12. The open house for the June 12 meeting starts at 6:30 p.m. with a presentation and feedback starting at 7 p.m.. That will be held at the Ann Arbor District Library’s downtown location at 343 S. Fifth Ave.

Comm/Comm: City’s FY 2015 Budget

City administrator Steve Powers updated the board on the fact that the city council had adopted the fiscal year 2015 budget at its May 19 meeting. The budget includes funding for three additional police officers – two of them for the city’s community engagement unit, and one for traffic enforcement. The budget also includes funding for an additional firefighter and an additional rental housing inspector. There’s also a one-time use of fund balance of $1 million dollars to address the backlog in maintenance on trees in the public right-of-way. The fiscal year begins July 1, 2014, Powers concluded.

Comm/Comm: Main Street Light Poles

Board chair Sandi Smith noted that the replacement of the Main Street light poles was well underway. From what she heard, there’s a significant difference in the brightness of the lights.

Comm/Comm: Communications, Marketing

Reporting out from the partnerships committee, Rishi Narayan said that the communications subcommittee had focused on a couple of different data items to help determine how best to market downtown. The key is how to help market downtown, not for the DDA to take sole responsibility for doing it, he said.

The idea is to help the downtown area associations and the Ann Arbor Convention and Visitors Bureau. He said the committee is currently exploring a couple of ideas. They’re waiting for some feedback on Ladies Night, which had been an attempt to increase sales and traffic at a time that was not normally high-traffic. It took place on May 9.

They’d come up with some pretty cool ideas about how to use parking data, Narayan said. They were looking at using a startup company in Ann Arbor to look at macro data on purchasing in the downtown. Narayan characterized the committee’s approach as multi-pronged. The committee wanted to get the most bang for the DDA’s buck, and did not want to simply invest money in various events, or into advertising or a website without having a metric by which to gauge success or failure.

Comm/Comm: Main Street BIZ

Keith Orr reported out from the partnerships committee on an update received from the Main Street Business Improvement Zone (BIZ).

Main Street BIZ geographic area and expansion. (Map by The Chronicle from the BIZ plan using Washtenaw County and city of Ann Arbor GIS services mapping tools.)

Property owners immediately adjacent to the existing BIZ had been interested in participating, and the result of the vote among property owners was in favor of expansion. The expansion increases the geographic area of the Main Street BIZ by about 150%, he said.

The DDA had been asked to voluntarily contribute to the BIZ – something the DDA had already been doing for the Palio surface parking lot – even though the DDA is not assessed because it is a governmental entity, Orr said. Additional parking structures for which the DDA would be contributing a voluntary assessment would include the Kline Lot, the Fourth & William parking garage and the Fourth & Washington garage.

Comm/Comm: Sidewalk Maintenance

John Splitt reported that DDA executive director Susan Pollay and Joe Maynard [of Park Avenue consultants] had conducted a walk-around of the downtown to identify trip hazards and small maintenance issues with sidewalks. The budget for the work this year, which will take place over the rest of the summer, was about $75,000 or $100,000 dollars, Pollay thought. Splitt characterized the work as involving small concrete repairs, re-laying brick and those kinds of things.

Comm/Comm: TiniLite, Tiananmen Square

Changmin Fan introduced himself as the owner of TiniLite World. He told the board that he belongs to two countries – the United States and China. He noted that that very day – June 4, 2014 – was the 25th anniversary of the Tiananmen Square uprising. Up to 1,000 people were killed during that uprising, he said. The whole world had talked about it at the time, but it’s quiet now, he said. We should appreciate the democratic system that we have in the United States and in Ann Arbor, he said. He suggested that his company’s technology could be used to help solve social problems by providing a better means for communication.

Comm/Comm: Downtown Spring Party

Reporting out from the downtown area citizens advisory council, Ray Detter said the next day’s weather, on June 5, was going to be sunny and 70 F degrees for the annual downtown spring party, which he hosts at his home on North Division. He ventured that all of the candidates for city council and mayor would be in attendance, and said that everyone was welcome to come.

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

Absent: Russ Collins.

Next board meeting: Noon on Wednesday, July 2, 2014, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date.]

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The total general fund budget amendment was $60,000. For all other funds, the amendment approved by the council at its June 2 meeting totals $310,000.

The non-general fund amount will cover right-of-way maintenance and purchase of materials that were necessary to deal with the severe winter weather.

The general fund amount was the city’s cost for the Ann Arbor Area Transportation Authority’s special election held on May 6. That amount will eventually be reimbursed by Washtenaw County – which in turn will receive reimbursement from the AAATA to cover the roughly $100,000 total cost of the election.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

Left to right: DDA board member Keith Orr, mayor John Hieftje.

The DDA had actually already adopted its FY 2014 budget – back on Feb. 6, 2013. And although it’s been customary in the past years for the DDA to adopt its budget in advance of the city council’s approval, the state enabling statute for downtown development authorities provides a different sequence: “Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality.”

Considerable debate on the DDA’s budget had unfolded among city councilmembers at their May 20, 2013 meeting. And the council had ultimately decided on a 10-1 vote to approve a FY 2014 budget for the DDA that differed from the one the DDA had adopted in February. In addition to recognizing an additional $568,000 in tax increment finance revenue (TIF), the council’s action transferred an additional $300,000 from the DDA’s TIF fund to the DDA’s housing fund.

At their June 5 meeting, some DDA board members balked at the council’s action, citing the replacement of rusting-out light poles on Main Street as a more pressing need than reserving funds for undetermined future housing projects. But ultimately the board adopted the council’s approved budget on an 8-2 vote – with dissent from Sandi Smith and John Mouat. Absent from the meeting were Russ Collins and Nader Nassif.

At the June 5 meeting, the board concluded that a portion of the more than $516,000 cost for the Main Street light poles would need to come from the city’s general fund. Mayor John Hieftje indicated at the meeting that in the next month he expected the city council would be presented with a budget resolution authorizing the difference between the $516,000 total cost and the $268,000 that the DDA considers available in its council-approved budget.

Also approved by the DDA board were annual routine adjustments to its current year’s budget, which are undertaken to ensure that actual expenses and revenues are reflected accurately. The adjustments are made so that expenses do not exceed revenues in any of the funds. During those deliberations, back-and-forth between board treasurer Roger Hewitt and Newcombe Clark indicated a realization that the kind of budget amendment they were undertaking for FY 2013, at the end of the fiscal year, might be used to work around the budget levels authorized by the city council. It’s not completely clear if that strategy is possible.

But in response to Hewitt’s assurance that budget amendments could be enacted for any reason – as long as expenditures didn’t exceed revenues – Clark made his comment about people staying up too late on Monday nights. [The city council meets on Monday nights, and the council's deliberations on the DDA budget have gone long into the evening. If the DDA board can change its budget after adopting the council-approved version, then the council's deliberations would seem to be moot.]

The June meeting was Clark’s penultimate one, as his term expires at the end of July and he’s moving to Chicago to take a job there. The board’s July 3 meeting will also be board chair Leah Gunn’s last meeting, which will mark the end of over two decades of service on the DDA board, beginning in 1991.

The parking revenue and patrons report from the public parking system was one of the regular highlights of the meeting. The DDA manages Ann Arbor’s public parking system under a contract with the city. The parking report was complemented by a board resolution that awarded five additional monthly parking permits to The Varsity residential project, bringing its total to seven. The DDA can assign monthly permits to residential projects under the city’s contribution in lieu (CIL) program – which provides a mechanism for building housing without providing parking spaces onsite.

Local developer Peter Allen addressed the board during public commentary, reporting that his company had been one of three to submit bids in response to the city’s RFP (request for proposals) for brokerage services to sell the former Y lot at Fifth and William streets. He told the board he thinks the parcel is worth $5-7 million or more.

Budget Issues

The board handled two major budget issues and entertained discussion on others. The main issues were: (1) the adoption of the city-council approved FY 2014 budget, on which the council had voted at its May 20, 2013 meeting; and (2) adjustments to the FY 2013 budget, which is the current fiscal year now drawing to a close on June 30.

During deliberations at the May 20 meeting, the council had ultimately decided on a 10-1 vote to approve a FY 2014 budget for the DDA that differed from the one the DDA had adopted in February. Christopher Taylor (Ward 3) cast the sole vote of dissent. In addition to recognizing an additional $568,000 in tax increment finance (TIF) revenue, the council’s action transferred an additional $300,000 from the TIF fund to the DDA’s housing fund.

Budget Issues: FY 2014

By way of background, according the state’s enabling statute for downtown development authorities, a DDA is supposed to adopt its budget after the governing municipality approves it [emphasis added]:

125.1678 Budget; cost of handling and auditing funds. Sec. 28. (1) The director of the authority shall prepare and submit for the approval of the board a budget for the operation of the authority for the ensuing fiscal year. The budget shall be prepared in the manner and contain the information required of municipal departments. Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality. Funds of the municipality shall not be included in the budget of the authority except those funds authorized in this act or by the governing body of the municipality. (2) The governing body of the municipality may assess a reasonable pro rata share of the funds for the cost of handling and auditing the funds against the funds of the authority, other than those committed, which cost shall be paid annually by the board pursuant to an appropriate item in its budget

However, the Ann Arbor DDA board has typically adopted its budget before the city council approves the city’s fiscal year budget, of which the DDA’s budget is a component.

At the board’s June 5 meeting, Roger Hewitt led off the discussion on adopting the FY 2014 budget by noting that according to the state enabling legislation for DDAs, the city council approves the DDA’s budget, and then the DDA board formally adopts that budget. There were a couple of changes that the city council made compared to the budget that the DDA board had previously adopted in February, Hewitt said. So the board was being asked to consider a revised budget that reflected changes approved by city council. [.pdf of FY 2014 DDA budget adopted in February] [.pdf of revised FY 2014 DDA budget]

Income to the TIF fund was being revised in the budget based on new information from the assessor’s office – to a total of just over $4.5 million, Hewitt told the board. The council had also increased the amount of inter-fund transfers from the TIF fund to the housing fund from $100,000 to $400,000 – a $300,000 increase. The budget the board was being asked to consider, Hewitt said, showed capital costs would be increased from $300,000 to $568,000 – to replace the light poles on Main Street.

Ann Arbor Main Street rusted light pole. (Photo from April 2012 by city of Ann Arbor staff.)

Susan Pollay, executive director of the DDA, indicated that only $268,000 of those capital costs were intended by the DDA currently to be used for light poles on Main Street. She told the board that she was in conversation with city staff about how to come up with the difference between $268,000 and the estimated cost of doing the replacement for the poles – which is $516,000, including warranties and labor. She thought that a resolution would be presented to the city council within the next month asking for a city council approval to appropriate the remaining money from the city’s general fund. Approval for the project would be coming back to the DDA board in July, Pollay said.

Looking at the housing fund in more detail, Hewitt noted that the total $400,000 transfer into the housing fund showed up as income to that fund. Another change to the budget was to move a different $400,000 to support affordable housing in Village Green’s City Apartments project, which had originally been part of the previous year’s budget. That leaves the housing fund balance for fiscal year 2014 at about $382,000, Hewitt concluded.

By way of background, the politics of the housing fund transfer involve pending revisions to the city ordinance that regulates how the DDA’s TIF capture is calculated. The existing ordinance language, enacted in 1982, indicates a cap to TIF revenue, calibrated to the anticipated increase in tax valuation in the TIF plan, which is a foundational document for any DDA. Revenue above the cap is supposed to be returned to the taxing jurisdictions in the district, whose taxes the DDA captures. The DDA contends that it only became aware of the cap in 2011, when it was pointed out by the city treasurer.

The DDA eventually adopted the position that it could give the ordinance language an interpretation that did not require the return of any TIF dollars to the taxing jurisdictions. The DDA’s response to proposed changes to the language to prevent its non-cap interpretation of the ordinance was to raise the specter of a diminished ability of the DDA to support affordable housing. Councilmembers who were pushing to clarify the ordinance responded to the DDA’s political argument, based on affordable housing, with a political move of their own – the forced transfer of money from the DDA’s TIF fund to the housing fund.

Sandi Smith led off deliberations by saying she had a problem transferring $300,000 to the housing fund when the DDA had been working pretty hard to contribute to affordable housing, without a clear path for doing that. It’s been a struggle for the last eight years sitting on the partnerships committee trying to find solid projects and a method to invest in affordable housing downtown, she said. The transfer seems “arbitrary,” Smith said, when there are other very clear needs, giving the light poles as an example. Smith felt the DDA had been very good about putting money aside for housing, but she allowed that the DDA had cut back a couple of years in order to build the new Library Lane underground parking structure. But the board had now begun again to invest in housing and to put some money aside.

It’s challenging now, Smith said, to accept what the council had done by moving an arbitrary amount of money over into the housing fund – without a project that is specifically ready to go. She described it as unfortunate that the city had not approached the DDA partnerships committee beforehand to have a discussion with the chair of that committee or the chair of the DDA board, to ask: “Is this a useful thing for you to do?” She said it had been done in an arbitrary and off-the-cuff way at the 11th hour.

Smith asked what kind of flexibility the board had at this point. She did not see the transfer from TIF to the housing fund as a benefit to anything the DDA is doing as far as affordable housing goes. She did not feel it benefits the downtown in any way to move the money over to the housing fund in a “holding pattern,” waiting for the DDA to find a project to invest in. Hewitt told Smith that he did not necessarily disagree with her, but the state law is clear that the DDA’s budget must be approved by the city council. The DDA adopts its budget after the city council approves it. “The law is the law,” Hewitt concluded.

Newcombe Clark talks with DDA executive director Susan Pollay before the June 5 meeting.

Newcombe Clark drew out the fact that in the council’s resolution passed on May 20, the housing fund transfer is explicitly required, but the council’s direction to spend money on the Main Street light poles is put in terms of a request. He concluded that one of the moves had been forced while the other had been merely requested.

Mayor John Hieftje, who voted with the 10-member majority in supporting the council’s resolution, told the board that these issues had been discussed at the council’s meeting. He had been unsuccessful in convincing other councilmembers that the amount of the housing fund transfer should not be as great, he said. His point at the council meeting had been to stress the importance of replacing the light poles on Main Street, he added. But he noted that the original resolution that had been put forward called for an even greater amount of $500,000 to be transferred to the housing fund, which would have made it unavailable to spend on light poles. What the council had approved had been a compromise. He described the number of light poles that had blown down as three or four. [City staff in the public services area responded to an e-mail query from The Chronicle about the exact number of light poles that had failed, by explaining that two had fallen while two more had been replaced when they were deemed on inspection to be in immediate need of replacement.]

Board chair Leah Gunn ventured that the city’s general fund will have to cover the balance of the expense for the light poles [$516,000 - $268,000 = $248,000]. Hieftje indicated that he was hopeful it would be possible, but he was not sure if that would have majority support on the city council: “I can’t predict that.” But he would be voting to support replacing light poles with general fund money, he said. Smith indicated that to her it was a priority to replace light poles. She characterized the housing fund transfer as “feel-good money,” because there’s pressure for affordable housing – without a commitment by the council to find a way to fund it. She indicated she would not support the budget change even though she knew it would pass. About the council’s fund transfer, she concluded: “It’s nonsensical to me.”

Clark floated the idea that light poles in front of Ashley Mews could be replaced with housing fund dollars. Pollay told Clark that the light poles in need of replacement are located on Main Street between Huron to the north and William on the south – so, no. [Ashley Mews is south of William.] Hieftje added that Craig Hupy, the city’s public services area administrator, had characterized the need to replace the light poles on Main Street as “urgent.” [The need is based on rusting of the poles, which apparently makes them susceptible to catastrophic failure.]

John Mouat indicated agreement with Smith – though he was not so much concerned about comparing replacement of light poles to investment in housing. He was more concerned about the process. He agreed with Smith’s characterization of the amounts as arbitrary. The DDA support of affordable housing needs to take place in the context of a process, he said. So he was not inclined to support the budget. John Lowenstein pointed out that this was for the fiscal year 2014 budget, and that meant that if there were no appropriate housing projects to spend the money on in that fiscal year, then the budget for next year would be amended based on experience rather than “random decisions.”

DDA board member John Mouat.

Gunn noted that the DDA’s partnerships committee would be meeting with representatives of the housing community later in June to find out what affordable housing projects are in the pipeline. But the DDA’s commitment to affordable housing is clear, and the light poles are an emergency, Gunn concluded. During her report out from the partnerships committee, Sandi Smith had noted that the June meeting would include representatives of the affordable housing community so that the DDA board can be as informed as possible about the joint city and county goals, and how the DDA can align its work plan to best help the process. That meeting will take place two hours later than it usually does – which puts the time at 11 a.m. on June 12.

Given that the meeting with representatives of the housing community was pending, and that the city council was going to be considering possible action on funding light poles, Hieftje ventured that the DDA board had the option of postponing the vote on the budget until its next meeting, in July. Bob Guenzel responded to Hieftje by pointing out it was not actually an option because the board needed to adopt the budget before the fiscal year started. Guenzel then stated, “But I assume we can amend the budget along the way if we decide to do that in July, and that can be done.” This comment set the stage for discussion later in the meeting – about the DDA’s ability to change its budget later in the year without city council approval.

Keith Orr agreed with Mouat’s point about the process. It struck him as odd that some councilmembers said they were looking for a more autonomous DDA [an allusion to comments by Jane Lumm (Ward 2)], but at the same time the council is also giving very specific direction about how to spend the money.

Outcome: The DDA board approved the fiscal year 2014 working budget on an 8-2 vote. Dissenting were Sandi Smith and John Mouat.

Budget Issues: FY 2013

The board was also asked to consider amendments to its current year’s budget to reflect the actual revenues and expenses through the year – mainly to avoid the possible circumstance that has arisen in the past in which expenses might exceed revenues in a particular fund, which is a violation of state law. Hewitt noted that the board had already undertaken a midyear budget adjustment – to reflect some of the costs of the Library Lane parking garage construction. Changes considered at the June 5 meeting included items related to the Zingerman’s brownfield grant, pushing a $400,000 payment for Village Green’s affordable housing units to the next fiscal year, adding in grants to the Ann Arbor Housing Commission for Baker Commons improvements.

Hewitt noted that the maintenance fund for the parking system was getting down to its lowest level. The DDA has been using maintenance funds, Hewitt said, to pay for the new Library Lane parking structure. But for the next year’s budget there is a transfer of $4.4 million back into the parking maintenance fund, he reported.

Then came Clark’s inquiry about the possibilities for amending the budget generally, given that the board was amending that year’s budget to adjust it for variances near the end of the fiscal year. Clark questioned what the requirement was for amending the budget: Was the DDA required to amend its budget twice a year? Hewitt indicated that it was only necessary once, but the DDA had amended the budget previously this year – because a huge amount of construction costs had come in that were not reflected in the budget for this year. So a midyear revision was done to give a clearer idea of where the DDA would be at the end of the year.

Clark asked if the requirement was only that expenses be updated that were above budget, or if adjustments to revenue were also required to be made. Hewitt indicated that both kinds of revisions were supposed to be made – for revenues and expenses. The important thing is that the expenses can’t be above what were budgeted. Clark then made clear why he was asking question: Does it need to go back to the city council for approval? he asked. The answer Hewitt gave Clark was no. The council approves the DDA’s budget for the upcoming fiscal year, Hewitt said. But the council does not need to approve the DDA’s final budget, which reflects the DDA’s actual expenses and revenues, Hewitt contended.

Clark inquired whether there was some threshold for a reason the DDA might change its budget. Does the state of Michigan care why the DDA might change its budget? Clark asked. Not that he was aware of, Hewitt said: “It’s up to us.” The important thing is that the DDA can’t have negative fund balances, Hewitt said, stressing that the DDA can’t spend more money than it has budgeted for. Clark’s summary of what he’d drawn out: “Too many people’ve been staying up too late on Mondays, then.” The allusion was to the fact that city council had debated issues of DDA budget control at its Monday meetings, long into the night.  If the DDA retains the ability to amend its budget later, that would allow the board to work around the council-approved budget parameters.

Outcome: The DDA approved the adjustments to its FY 2013 budget.

Budget Issues: Police Funding

At its June 3, 2013 meeting, the city council had voted 8-2 to encourage the DDA to consider allocating $270,000 to fund three police officers for the downtown area. During her communications time, board chair Leah Gunn reported the council vote, which had been approved two days earlier. Gunn told the board that she was referring the request to the board’s operations committee. She indicated that the board needed to talk to the chief of police and other community members in order to weigh the council’s request.

Budget Issues: DDA Ordinance Revisions

During communications time, Roger Hewitt noted there had been quite a lot of discussion about modifying the ordinance regulating how the tax increment finance (TIF) capture for the DDA is defined. The issue had been postponed until September, he noted. [That vote by the city council postponing final consideration until Sept. 3 came on May 6, 2013.] The previous day, he and Bob Guenzel along with Susan Pollay had some informal discussions of the ordinance along with some councilmembers, Hewitt reported. [The proposed ordinance revision would clarify the existing language in Chapter 7 of the city code, originally enacted in 1982, so that the DDA's preferred interpretation – which does not cap the DDA's TIF revenue – would not be possible.]

Budget Issues: Third Quarter Update

The third-quarter financial report was also delivered by Roger Hewitt. He noted that the $1.28 million increase in parking revenue was due to the loan that the DDA had received for parking equipment from Republic Parking. Accounting rules required the DDA to show that money as revenue, with interest to be deducted as expenses. He noted that utility costs have been higher than anticipated, as were bank charges. The increased bank charges, he said, were attributed to the increased use of credit cards by parking customers. Fees charged for those credit card transactions continue to go up, he said. Hewitt also highlighted that the $400,000 payment to Village Green to support affordable housing in the City Apartments project would not take place this fiscal year. That would be pushed to the following year.

Parking for The Varsity

The DDA board was asked to consider assigning monthly parking permits to The Varsity, a residential high-rise building at 425 E. Washington St. in downtown Ann Arbor. The request was for five additional monthly parking permits in the public parking system, bringing The Varsity’s total to seven.

The right to purchase monthly parking permits – under the city’s “contribution in lieu” program – is administered by the DDA.

The DDA had previously approved two permits for The Varsity, which is a 13-story, 173-unit, 178,380-square-foot apartment building for approximately 418 people. Construction is nearing completion.

The project needs to provide a total of 76 parking spaces. That parking is required in order to qualify under the city’s zoning code for the additional floor area that the project contains, beyond a basic 400% floor area ratio (FAR). If the parking is not provided onsite, a developer can meet a parking requirement by making an upfront payment of $55,000 per space or by purchasing monthly permits in the public parking system for an extra 20% of the current rate for such permits – with a commitment of 15 years.

The Varsity’s developer had originally planned to meet part of the 76-space requirement with two spaces that were assigned to a car-sharing service. That arrangement fell through. And the developer lost a space due to physical constraints related to ADA (Americans with Disabilities Act) compliance. Car-sharing spaces can count as four spaces apiece for satisfying parking requirements.

That led to the request for an additional five spaces, for a total of seven for The Varsity.

The Varsity is the second project to use the parking CIL. On Oct. 3, 2012, the DDA board voted to approve the purchase of up to 42 monthly permits by the 624 Church St. project, another residential development.

Parking for The Varsity: Public Commentary

Brad Moore introduced himself during public commentary time as the associate architect on The Varsity. He noted that the project had previously requested some spaces but had not requested enough of them – so they were now back to ask for a few more. He told the board that he was available to answer questions when the item was reached on the agenda.

Parking for The Varsity: Board Deliberations

When the item was reached on the agenda, Roger Hewitt asked Moore to come to the podium to answer questions. After reciting the history of the requests, Hewitt asked Moore what happened to the two physical spaces that were intended to be used for the car-sharing service. Moore explained that the deal with Zipcar had fallen through because Zipcar had wanted the spaces to be available to the general public – whereas The Varsity wanted the cars to be available just to residents of The Varsity.

What Hewitt wanted to know is what happened to the two physical spaces that prevented The Varsity from including them in its current count of parking spaces. Moore explained that the spaces are located on an adjacent property that is under the same ownership. However, because those two spaces are not a part of the project’s site plan, Moore indicated there was a problem in counting those spaces to satisfy the parking requirement. Newcombe Clark expressed some puzzlement that the spaces themselves could not count as one space apiece for the parking requirement, yet those same spots had been intended to count as four spaces apiece under the Zipcar arrangement.

Hewitt ventured that it might be possible to create some kind of an easement in perpetuity that would allow for the inclusion of those two spaces has part of the parking requirement tally for the project. John Splitt questioned whether the developer for The Varsity was even interested in pursuing such an easement. John Mouat expressed some skepticism about the idea of pursuing an easement, saying it seemed like an encumbrance on the adjoining property. Joan Lowenstein added that pursuing an easement could take several months.

Hewitt allowed that there was somewhat of a timing issue, and indicated that he would have preferred for The Varsity to have approached the DDA sooner. Still, Hewitt indicated that he would support allocating the permits. Sandi Smith added that the permits under the CIL program are purchased at a premium cost of an extra 20%. She characterized the permits as no different from any other permits. Clark questioned Smith’s characterization – venturing that the permits being granted to The Varsity would allow jumping to the front of the monthly permit line, or else would require reducing the amount of hourly parking available in the structure where the permits were being granted.

Hewitt responded to Clark by indicating his understanding was that The Varsity would need to have the permits in hand in order to receive its certificate of occupancy. Hewitt indicated that either The Varsity monthly permit requests would jump to the front of the monthly permit waitlist, if there were a list, or that the amount of hourly parking would decrease. He indicated that the waitlist turned over relatively quickly these days – but he noted that it depends on the structure. Given the small number of spaces and the hold-up it would mean for the development of a large building, Clark indicated that he would support the allocation of the spaces. However, he wanted to see the operations committee address the policy issue sooner rather than later.

Hewitt said that the operations committee is very focused on the issue of trying to rationalize needs within the system. He characterized the CIL program as stemming from an ordinance passed by the city council – saying it was not a DDA policy. However, the DDA has veto power if there are no spaces available in the system, and the DDA has the right to decide in which structure the spaces are allocated, Hewitt said. In this respect, the DDA is responding to a city ordinance, he said.

Clark asked if the developer would care if the parking permits were assigned to a structure further away from the building under construction. Moore replied that he figured the developer would prefer that the permits not be assigned to the most remote location. Clark ventured that if he were on the waitlist and he kept getting bumped for something like this, “I’d be frustrated.” Approaching the issue in a piecemeal fashion was not advisable, given the amount of construction that’s taking place downtown, Clark felt. Hewitt told Clark he agreed with him completely. He contended that demand in the public parking system is increasing at a significant rate and the DDA is trying to catch up with a very dynamic and changing system. But he agreed that the DDA needs a rational system for making the decision on permits.

Keith Orr indicated his agreement on the need for a policy so that decisions are not seemingly random. He indicated that he would be the “gadfly vote” and would vote against the allocation of permits to The Varsity just as a reminder that there needs to be a policy in place.

Outcome: The DDA board voted to allocate a total of seven monthly parking permits to The Varsity, over dissent from Keith Orr.

Routine Parking Reports

Delivering the parking report as usual was Roger Hewitt. The monthly parking report for March 2013 was up first. For that month, and he described overall revenues as up 7% compared to March 2012, although the number of hourly patrons was down by about 2%. He called 7% roughly the equivalent of the rate increase over the previous year. That translated to a flat performance on the revenue side. However, he offered some mitigating factors – one less business day, worse weather than last year, and the timing of the university’s spring break. And that accounted for the flat performance in revenue, he contended.

March was the last month of the third quarter. So Hewitt gave an update for the third quarter. For that three-month period, the number of hourly patrons was roughly flat, but revenue was up about 11%, which was above the level of the rate increases, he said. For the quarter, Hewitt characterized the parking system as having continued strong demand and good revenue growth. That was a trend that has persisted for about two years, he said.

Hewitt then reviewed the nine-month period year-to-date. Overall revenues are up 12%, though the number of hourly patrons is down a little bit, he noted. From that he concluded that people who are visiting downtown are staying longer. Revenue growth is above the level of the parking rate increases. The new Library Lane underground parking garage is showing stronger performance than had been anticipated – so it is almost to the point of starting a waitlist for monthly parking permits, Hewitt said. That’s good news and bad news, he said. It shows strong demand, but it is filling up faster in the DDA ever anticipated. And that forces the DDA to face problems down the road sooner than the DDA thought it would. John Mouat ventured that instead of “problems” they might be “opportunities.” Hewitt also indicated that downtown looks strong based on his own personal business. [Hewitt owns the Red Hawk restaurant on South State Street, and the revive + replenish grocery and cafe at Zaragon Place on East University.]

Also during his discussion of revisions to the current year’s budget, Hewitt had noted that parking revenues were higher than budgeted – attributable mostly to better-than-expected revenues from the Library Lane structure. Typically a new structure won’t generate a lot of revenue in the first couple of years, he said, because people take a while to find the structure and to change their habits. But people are changing their habits at a much more rapid pace than the DDA had anticipated, Hewitt said.

Mayor John Hieftje picked up on an earlier comment that Hewitt had made – that it might be necessary to create a waitlist for monthly parking permits for the Library Lane structure. Hewitt responded to Hieftje, saying that the challenge in coming up with a policy on that issue is that the DDA does not ask people on their way into a parking structure who they are and why they are here. Trying to balance monthly demands and hourly demands between workers and guests is not a simple thing. Clark ventured that nothing the DDA does is simple.

The following charts were generated by The Chronicle with data provided in regular monthly parking reports.

Ann Arbor public parking system total revenue.

Ann Arbor public parking system hourly patrons.

Ann Arbor public parking system surface lots.

Ann Arbor public parking system structures.

Ann Arbor public parking system total revenue by facility.

Ann Arbor public parking system. Number of hourly patrons by facility for selected facilities.

Communications, Committee Reports

The June 5 meeting included the usual range of reports from the board’s standing committees and the downtown citizens advisory council, as well as public commentary.

Comm/Comm: Economic Development Task Force

During her communications time, board chair Leah Gunn notified the rest of the board that the city council had passed a resolution establishing an economic development task force. [That action had come at the council's May 20, 2013 meeting. The task force, which includes membership from the city and Ann Arbor SPARK, as well as the Ann Arbor DDA, will consist of up to nine members. Three of the members will come from the Ann Arbor DDA board.] Gunn indicated that she was appointing board members John Mouat and Bob Guenzel, as well as executive director of the DDA Susan Pollay, to represent the DDA on the task force. [The city will be represented by city administrator Steve Powers, and city councilmembers Sally Peterson and Marcia Higgins.]

Reporting out from the partnerships committee, Joan Lowenstein said that Paul Krutko, CEO of Ann Arbor SPARK, had spoken to the committee. One thing he had stressed is the fact that “place making” matters. He’d said it’s important to “create place.” The idea is that nowadays people figure out a place they want to live and then find a job there, instead of the other way around, she said. There are a lot of businesses that SPARK talks to who want to locate downtown, but the right kind of space is not available for them, Krutko had also told the group, according to Lowenstein. And corporate leaders often raise the issue of the availability of hotel and meeting space in downtown Ann Arbor. He’d said it is a real obstacle, because other communities have the ability to host large conferences, and can then attract people who become aware of the community through their attendance at the conference.

Lowenstein cited Greenville, South Carolina, as an example of a city that has a lot of hotel and conference space downtown. A big automotive conference is hosted there, which was attended recently by six people from the University of Michigan, who spoke at the conference. It was in South Carolina, not here – where the auto industry is, Lowenstein said. Ann Arbor SPARK sees a lot of opportunity to partner with the DDA, Lowenstein said – on the topic of benchmarking against comparative communities and working to understand how places like Greenville are doing a better job than what Ann Arbor is doing, and to see what Ann Arbor can do better.

Ann Arbor SPARK has also made themselves available for RFP (request for proposals) processes like the one for the former Y property, so that SPARK can help look for appropriate businesses to locate there. Lowenstein characterized the partnerships committee session with Ann Arbor SPARK as beneficial. Sandi Smith pointed out that four councilmembers had been present at the partnerships committee meeting [Sabra Briere, Sally Petersen, Marcia Higgins, and Jane Lumm]. She described the councilmembers as engaged in the whole discussion, saying it was a very powerful meeting.

Comm/Comm: Sale of Former Y Lot

By way of background, on March 4, 2013 the city council had authorized the city administrator to issue an RFP (request for proposals) for brokerage services to sell the former Y property located at Fifth and William. It’s currently owned by the city, which it had purchased for $3.5 million. On Oct 15, 2012 the council had voted to allocate the net proceeds of the sale of the Y site to the city’s affordable housing trust fund.

During public commentary at the end of the DDA’s June 5 meeting, local developer Peter Allen reported that the bids for the RFP for brokerage services had been opened last Friday. There had been three bidders, he said: Jim Chaconas of Colliers International; Tim Guest with CB Richard Ellis Inc.; and Allen himself with his company, Peter Allen & Associates. The timetable is to interview in late June or early July, Allen said. A recommendation was supposed to go to the city council around Aug. 1, he continued.

Allen reported that he heard interest from boutique hotels and from grocery stores. Certainly ground-level retail is in demand, he said. He thought that a mix of uses would be very consistent with the connecting William Street (CWS) project – a recent planning effort that had been led by the DDA. From a market standpoint, he felt that the CWS recommendations are very solid, thorough and achievable. One of the implications for the DDA board to think about, he said, was the fact that the proceeds from the sale go to the city’s affordable housing trust fund. He felt that the market value of the parcel could be in the neighborhood of $5-$7 million, or more depending on how it is configured. The idea of adding air rights on top of the new Blake Transit Center is very feasible, Allen said. The topic of possibly updating the CWS study in the context of possible proceeds would be a suitable topic for a future meeting of the DDA, he said.

Comm/Comm: A2D2 Zoning Review

Ray Detter reported out from the previous evening’s meeting of the downtown area citizens advisory council. He noted that the DCAC had supported the passage of the A2D2 zoning and the downtown design guidelines two years ago. He recited a description of how the design guidelines provide a mandatory process, but only voluntary compliance with recommendations of the design review board.

Detter characterized the city council’s May 13, 2013 vote on the 413 E. Huron project as a 6-5 approval. But he said that the council’s opposition to the design, mass and scale of the building had been unanimous. The six members who voted for the project, Detter said, feared a possible lawsuit over a denial. From that episode, Detter concluded that there was something lacking in the city’s D1 zoning definition. [D1 is the city's zoning district that allows for the highest density development.] Detter highlighted other areas zoned D1 in the city that he felt warranted further review – including sites to the east of Sloan Plaza, and the former YMCA site at William between Fourth and Fifth avenues.

He characterized the problem as conflicts between the D1 zoning category and the nearby residential neighborhoods. He allowed that there had been a lot of public input throughout the earlier A2D2 process, but he said that the city needs to do a better job now at correcting areas where D1 zoning needs improvement. Detter then alluded to the city council’s resolution, approved on April 1, 2013, that directed the planning commission to conduct a review of D1 zoning.

The recommendations resulting from that review should not be left up to the planning commission’s ordinance revision’s committee, he said. He contended that a lot of people did not believe that floor area ratio (FAR) premiums should be provided for “things we don’t want as a community – student housing, for one thing.” [Currently, the D1 zoning category allows for 400% FAR by right, with additional by-right FAR provided for residential use.] Some people say that a moratorium is needed while the community makes up its mind about these things, Detter said. “We don’t want 413 [East Huron] to happen again,” Detter concluded.

He allowed that the council’s resolution directing the review set Oct. 1 as a deadline. But Detter contended that no real schedule had been set for getting it done.

Comm/Comm: July 3 Meeting Date

During communications time, board chair Leah Gunn raised the question of the board’s regular monthly meeting date in July – which this year falls on July 3. She offered the choice of changing the date or keeping it as it is: “What is your pleasure?” John Mouat indicated that he would not be able to attend. With no further comment from the board, by apparent mutual assent the established meeting date of July 3 remained unaltered.

During communications time Gunn also pointed out that no regular meeting was scheduled for the month of August, which is the board’s custom.

Comm/Comm: A2 Downtown Blooms Day

Nancy Stone, who handles communications for the public services area of the city of Ann Arbor, addressed the board during public commentary time to thank the DDA for its annual support of A2 Downtown Blooms Day. She highlighted the contrast between now and 25 years ago, when the annual volunteer date was called Downtown Cleanup Day. Whereas 25 years ago people were using brooms to sweep up litter, today it’s a festival of planting flowers and beautifying the city, she said. In addition to the DDA she thanked the merchant associations and Pizza House, which provided pizzas for the volunteers. She showed the board a video that had been created by 2|42 Kids Care Club assisting with the event last month.

Comm/Comm: Stipends for Street Performers?

During communications time toward the start of the meeting, mayor John Hieftje, who also sits on the DDA board, told other board members that he wanted to share an idea he had also discussed briefly at the downtown marketing task force the previous day. He described being at the farmers market a few weeks ago, when it was a beautiful sunny day, and he had gone over to Sculpture Plaza where a group of University of Michigan students were playing an interesting array of instruments – an accordion, an upright bass, and a saxophone. It was very nice music, he continued, and they were drawing a crowd. He characterized it as very pleasant.

Hieftje recalled a few summers ago being in Montreal and seeing some street performers. In talking to them afterwards, he said, they revealed that they had received a stipend for performing. So he wanted to see the DDA board explore the idea, which might amount to a few hundred dollars per occasion, to sponsor some “spontaneous” street performances – though he allowed they would not be exactly “spontaneous.” He ventured that such a program might cost $2,000 a year. That kind of thing might make it more interesting to be downtown, he said.

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

Absent: Nader Nassif, Russ Collins.

Next board meeting: Noon on Wednesday, July 3, 2013, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date.]

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Budgeted expenditures for the parks and recreation unit in FY 2014 – from the city’s general fund as well as from the parks maintenance and capital improvements millage – are $12,546,068. Of that, about $5.2 million will be paid from the millage, with $7.3 million from the general fund. In addition, the parks and recreation unit has responsibility for several smaller budgets, including a separate fund for the farmers market.

Colin Smith, the city’s parks and recreation manager, gave a budget presentation during the meeting, noting that it was the first time during his tenure that no cuts or service reductions are being proposed. “The message is status quo,” he told commissioners. “There’s not a significant change here.”

Among the items he noted in his presentation was a change in the budgeting for the city’s two golf courses at Huron Hills and Leslie Park. Rather than operating as a separate golf enterprise fund, the budgets for the golf courses will be part of the parks and recreation portion of the general fund. That change better mirrors how the golf courses actually operate, Smith said, and helps integrate the golf operations into the rest of the parks and recreation unit.

The PAC resolution highlighted several key elements of the fiscal 2014 parks and recreation budget:

• Increased revenue due to higher than anticipated usage at the Argo Cascades.
• Increased revenue by increasing rental fees at Cobblestone Farm and the Gallup Park meeting room.
• A continuation of the 14-day mowing cycle.
• Continued use of seasonal park supervisor positions to increase staff presence in the parks for improved maintenance and enforcement.
• A reduction in natural gas usage expenses, reflecting recent infrastructure energy improvements at various recreational facilities.
• A reduction in expenses for materials and supplies that were previously needed to maintain recreation facilities, as a result of recent improvements.
• A plan to optimize staff software use and eliminate unnecessary software installations where appropriate.

The PAC recommendation will be forwarded to the city council, which will be voting on the city’s overall budget on May 20.

The April 16 meeting also marked the last meeting for commissioner Tim Doyle, who serves as chair of PAC’s budget and finance subcommittee. His term ends May 17, and he is not seeking re-appointment. He told commissioners at the meeting that he’ll be spending more of his time in Florida. Smith joked that he’d be happy to come to Florida to discuss the budget with Doyle next year.

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

FY 2014 Ann Arbor budget box. (Chronicle illustration using city of Ann Arbor budget summaries.)

That hypothetical was part of an April 2 conversation between Powers, chief financial officer Tom Crawford, and Chronicle editor Dave Askins. The focus of the conversation was to confirm and clarify some of the ideas that have been expressed at the city council’s budget retreat and work sessions over the past few months.

Announced by Powers and Crawford at the most recent council work session, on March 25, is the fact that the budget proposal is now essentially “inside the box” – meaning that it falls within the parameters imposed on Crawford by the city council’s adopted fiscal discipline priority. [.pdf of general fund budget summary as of March 25]

The tentative summary of the general fund budget calls for recurring general fund expenditures in FY 2014 of roughly $80.8 million, with $83.6 million in expenditures the following year.

Until March 25, the draft two-year plan had called for expenditures that would have left the city’s general fund unrestricted balance at $13.1 million (16.1% of operating expenses) and $9.7 million (11.5%) for FY 2014 and FY 2015, respectively. In the second year of that plan, the 11.5% left the city well short of the 15-20% currently recommended by Crawford, even though it’s within the 8-12% mandated by city policy.

But on March 25, the revised budget proposal called for unrestricted fund balances of $13.8 million (17%) and $12.1 million (14.4%) for the respective years.

Also up to March 25, the budget proposal had called for a two-year deficit of $252,000 for a specific subset of line items – which included recurring revenues, recurring expenses, recurring new requests and one-time requests. That’s a number that Crawford wants to balance for the two-year plan, even if it doesn’t balance in any one year. On March 25, the new figure was positive at $699,000 – or almost $1 million better than the original proposal.

The conversation between Powers, Crawford and Askins is reported below in more detail.

Pulling out some highlights, the discussion confirmed that this year’s budget won’t include a significant re-thinking of service delivery. Greater efficiencies and improved service could result from taking advantage of opportunities as they arise, but the recent departure of IT director Dan Rainey is not seen as an immediate opportunity for that kind of efficiency  – say, through a further merging of the Washtenaw County and city IT operations. Rainey’s position will be filled. With respect to IT in general, the telecommunications component of the staff’s draft economic development work plan – referred to as “fiber optic to the premises” – is still so conceptual in nature that the question of funding hasn’t been explored in detail.

Communication to the public from the city – in the form of reliable, consistent information about police and fire incidents – is a key part of the council priority that Ann Arbor feel (and be) safe. Related to that priority, the city administrator appears receptive to the idea of a data feed produced by the city containing all the police and fire calls. He indicated that a survey of citizens on attitudes and experience with public safety, as well as a range of other topics, is likely to be included in the FY 2014 budget.

With regard to a tentative proposal to remove funding for re-use of the city-owned 415 W. Washington site, it appears that the change was purely a function of a desire to get the budget “into the box.”

Priority One: Budget Discipline

Askins: I just wanted to start with the very first council priority [budget discipline] and the work plan associated with that – that’s the one that I would characterize as sort of “magnificently boring.” [.pdf of 2014 draft priority area work plans] So it’s basically keep doing what we’ve always done with respect to identifying efficiencies as they come up: We’re not looking to radically rethink the way we’re delivering services this time around. That might be for an off year in the future. But essentially we’re going to continue to exercise our usual good sense with respect to being good stewards of the taxpayer dollars?

Powers: Yes. And continue to review and work on opportunities where services can be delivered differently with the outcomes being: better service, less cost, or both. Opportunities for cooperation with other local governments, for example. The point that was made at the work session is that we don’t have any [additional efficiencies] currently on the shelf, that the staff is actively pursuing. And that was the reason for us calling that out – to make sure that the council understood that. If there were a different direction provided to staff [by the council], we could certainly be more aggressive in pursuing those opportunities.

I don’t know if we would be successful, because as I think Tom [Crawford] articulated very well, those opportunities and those initiatives take time, and for them to be lasting, for them to be sustainable, they really need to make sense for all parties – and not be a forced arrangement that may bring some temporary savings, some temporary benefits, but then fall apart because it really wasn’t built on a solid foundation. Dispatch, for example, I think will last – because it made sense, or if it’s sharing a service, then that lends itself to merge a multi-jurisdictional type of delivery. [Police dispatching for the Ann Arbor police department is now outsourced to the Washtenaw County sheriff's office.]

Askins: But my understanding of the conversation at work sessions is that this year the path to identifying those greater efficiencies is not going to come from the arbitrary imposition of some reduction targets, just to see what the various departments can come up with.

Powers: Correct.

Askins: I think [Ward 2 councilmember] Jane Lumm expressed some frustration about why aren’t we doing that. Why aren’t we identifying some reduction target to hit – because we should always be reducing by some amount to see what the departments come up with in response to that? So it’s my understanding that the push for greater efficiencies and improvements in services will not come from an across-the-board “let’s reduce” but rather from being judicious, and in taking advantage of opportunities when they come up. So, we didn’t anticipate that the set of events would necessarily unfold, but now that they have, we have an opportunity to do something.

Powers: Correct.

IT Operations

Askins: My actual specific question in connection with this issue relates to IT director Dan Rainey’s departure: Does that represent an opportunity to capitalize on the already existing collaboration that the city has with Washtenaw County, with respect to IT?

The city and county share data servers, and there’s some sharing of staff already. There are specific initiatives, like GIS mapping, that happens in collaboration with the county and the city – with fantastic results, from my vantage point. … I don’t think anybody was sitting around saying, “If Dan would only leave, then we could implement some further thing.” But given that he has left the city, does that represent an opportunity to say, Okay, we didn’t necessarily plan for that to happen or even hope for that to happen, but now that it has happened, let’s look at maybe further consolidating IT operations with the city and Washtenaw County? [Crawford has assumed the role of interim director of IT. When former city administrator Roger Fraser left the city, Crawford served as interim of that position, too, until Powers was hired.]

Powers: I am looking at the interim director!

Crawford: At this time … our organization is sizable enough, with unique enough needs, that we are presently planning to seek to fill the position – with the expectation that we continue these productive and mutually beneficial efforts that have been started [with the county].

Askins: Do you have any idea at this point whether that would be an internal hire, or an external hire, or what the timeline would be?

Crawford: I hope to have the position [posted] by the end of the month. It would be posted internally and externally.

Askins: It’s my sense that you already have plenty to do.

Crawford: Yeah, I am not looking to hold onto this long! Fortunately, we have a talented group that can sustain it for the interim period.

Fiber to the Premises

Askins: In connection with IT, and it might be that this is only thematically linked and has no actual practical connection here to real life, but IT shows up in the work plans – in my mind at least – in the form of the economic development piece. Residential fiber is on the list. [It's actually characterized on the list as "fiber to the premises."] In my recollection of the fiber initiative, when Google was offering their program and the city of Ann Arbor applied … former congressman Wes Vivian came and addressed the city council and he said, Listen, if Google doesn’t do this for us, we have got to figure out a way to do this for ourselves. It’s that important.

So what’s your sense of that work item? Are you getting any clear direction from the city council on that? Left to your own devices without any direction from the council, is that something were you would say, Yes, that’s something that really is important that we should pursue, and it’s just that we have to get a way to pay for it?

Powers: That is very important, and I think it’s part of place-making, part of having an environment that’s conducive to businesses and residents choosing to locate in Ann Arbor and stay in Ann Arbor. It’s also an example of the strategic cooperation that I think your earlier question was referring to in the first work area that you described as “boring.” But certainly that partnership with others is a key to having it feasible for us – because I don’t see it as something we could do on our own. It has to be in partnership with others. Our next step at a staff level will be to develop that action item into a more specific recommendation or proposal for the council to consider – and we are not at that point yet. Is there anything you want to add to that, Tom?

Crawford: “Fiber to the premises” is probably a better description than “fiber to the home.” … I think that’s what you’re seeing occurring in different cities. That means it doesn’t pick up just residences, but also businesses. Google is going into the home with their stuff. What you’re seeing other people do is going to the curb – just so you are aware of the distinction. It means different things to the business case and it means different things to the end user and potentially to the community, depending on whether they care about houses versus businesses.

Askins: So in terms of a possible funding sources, at least for the downtown area I would think of the Ann Arbor Downtown Development Authority and the Local Development Finance Authority. And specifically the LDFA, because that’s actually in one of its foundational documents, where it references telecommunications investments as an eligible expenditure. I’ve haven’t checked in recently to see what the LDFA’s finances look like. But the last time I checked in, there was some interest expressed on the LDFA board to make sure that the LDFA was not holding on to excess funds but was actually spending them. The sentiment was: You know, we’re not a savings account. If it’s 15% minimum fund balance that we have to keep, then we keep 15% and not more. [Crawford sits on the LDFA board in a non-voting, ex officio capacity.]

Crawford: That is still fair [to characterize LDFA board sentiment that way].

Askins: And so people were sort of saying: Hey, what about a wet lab? If we have the money, we should be spending it on something – so maybe a wet lab. When I was sitting in that meeting … I was thinking: Wet lab? How about fiber?

Crawford: You asked about funding and that’s relevant when you have an idea that has matured to the point where funding becomes an issue. I don’t think we have a concept that is that mature yet.

Askins: So it’s not even to the point where we have to figure out how to pay for this, because there is no “this”?

Crawford: Well, the [budget] proposal that the LDFA has for this year has not got anything like that included. … If you want to talk concept, yes, then the DDA is a possibility and the LDFA is a possibility. But there are so many steps it’s got to go through. Should public funds be involved? If so, in what way? Those questions have to be addressed. I’ve looked at various alternatives of possible funding for a concept, and I think we will continue to do that.

Askins: The third funding possibility I was thinking of is the cable licensing fees. Currently, by ordinance that has to go to community access television or communications for the city. Communications is a fairly general concept – right now I think it funds 1.5 FTEs – so that’s Lisa Wondrash’s position and Joanna Satterlee’s. My understanding, though, is that you could – or rather, the city council could in its wisdom – change the ordinance to direct cable licensing fees to allow for some other use  … For example, for the sake of argument, the ordinance could be changed so that half of the revenues have to go to community access television and communications, and half could be available for telecommunications-related infrastructure. Just conceptually.

Crawford: I’m aware of that conceptually.

Public Safety Communications

Askins: Related to communications, communications are an integral part of the work plan for public safety – the idea that success looks like this: We perceive the community to be a safe place. One of the action items involves communications, making sure that people have a reliable and accurate information source on which to form their perceptions.

Crawford: And we also have the survey that we’ve talked about.

Askins: At the work session it seemed to me like the idea of doing the National Citizens Survey resonated with the council? [.pdf of 2008 Ann Arbor National Citizens Survey]

Powers: Me, too.

2007-2008 National Citizens Survey Ann Arbor: Public Safety

2007-2008 National Citizens Survey Ann Arbor: Public Safety Benchmark Results

2007-2008 National Citizens Survey Ann Arbor: Reported Crimes

Askins: With the proviso from councilmember [Chuck] Warpehoski that he didn’t just want to do a survey, without saying in advance what we would consider to be good survey results. We don’t want to do the survey and then have people arguing about what it meant – which we will do anyway, of course. But I think that his thought was: We need to decide what success would look like in terms of the survey. Have you given any thought to what success would look like?

Powers: Not yet.

Askins: From my vantage point, I would say, the last time we did it was in 2008 with comparative data for 2007. So this time around I would expect that we would do at least as good or better than the last time around. Whether that’s reasonable or not, I think that’s the expectation that the community will have.

Crawford: Really? That’s an interesting assumption. That was the start of the great recession, with a lot of changes in the world. And a lot of reductions in police nationwide.

Askins: I’m not saying that’s necessarily a reasonable assumption, but I’m saying that this is the expectation I would predict for this community. You know Ann Arbor is a place where it’s always “better, faster, stronger,” so if we did a survey in 2008, and if the percentage of people who feel safe after dark was – let’s say for the sake of argument – 79%, it had better be 79% or above this time around. Or else people will conclude: Well, that just goes to show you that the reduction in police officers had a negative effect. That would be my prediction. I’m not arguing that position. And then there are the benchmarks that are built into the survey itself for the communities. And I would think that for Ann Arbor it would be automatic and axiomatic that of course, we will be better than the benchmark for all categories across the board. That’s just the expectation in the community.

Powers: And if council agrees with the recommended budget, I’ll be very interested in the results of a survey that would allow us to accurately and comprehensively compare Ann Arbor to benchmarks. The interesting discussion could very well be around the benchmarks and our definition of success. I think the problem and success statements from the council developed are a very good start and a nice foundation. And I think the next discussion around those would be that the council considers what questions to ask. For me, a helpful outcome will be: How well do we do, compared with agreed-upon benchmarks.

Askins: But the survey already does supply benchmarks. The results, if you scan through them, scores the outcomes for Ann Arbor … it’ll say it’s above or below the benchmark of other communities. … If we agreed as a community in advance – that we’re willing to say that Ann Arbor is perceived as a safe place if we’re better than the benchmarks measured in this survey – then we’d have a consensus that if we meet that, then the city will have achieved success as council has defined it.

Powers: By one measure.

Askins: One of the action steps for perception of public safety was media articles talking about the successful conclusion of criminal investigations. So as residents of the city – just imagine that you are living in a city and not working for the city: What kind of crime/police coverage would you want to read? Let’s imagine that Ann Arbor had a daily newspaper and a section called “public safety.” If you were the editor of that publication, what kind of thing would you put in that public safety section? I mean, it would be great, right, if every day it was “No Crime, Again Today!”

Powers: I’m kind of leaning the other way – and say ideally it would just be like the daily activity log. The activity log that generated an actual dispatch call or some recordable event. Whether that is realistic for a community our size, I don’t know. For my own personal experience, family experience, that would be of interest to my family – that level of minutia.

Crawford: Kind of like an RSS feed of the calls?

Powers: Yes. I think what chief [of Ann Arbor police John] Seto was thinking in the action items would be: consistent reporting, helped by the city through providing the information. It would be a consistent reporting on the crimes and activities that do generate community and resident interest – as measured by not only our experience, but more importantly as measured by the phone calls and e-mails we receive. And the same types of input that councilmembers receive from constituents. Graffiti, for example. I think the higher profile cases do generate some media coverage – the breaking-and-enterings, the assaults. I think chief Seto recognizes that we need to be taking more responsibility as an organization for sharing the information.

Even with our communications staff, I think we tend to not really share the good work that is done by our employees, and that is being done by the police officers. We just say: That’s part of why we are here – an occasional thank you will suffice, thank you very much. We don’t do as good of a job as we should be doing in sharing the good work and the results of that good work with the community – either through the media, or through the city council, or through our own press releases.

Askins: Let’s go back to the part where you talk about the data feed of just the activity log and the reports.

Powers: It could be a version of [The Chronicle's] Stopped.Watched. Maybe Stopped.Called.?

Askins: Well, to some extent, though, the city already does push information like that out in the form of the … it’s the mapping thing.

Crawford: The website is crimemapping.com.

Askins: That’s already a huge step in that direction, I think. So what I’ve been doing since it launched … is routinely downloading everything. [The site provides data for just the most recent six months, on a forward-moving window.] So we’re getting to the point where there’s two years worth of data. So instead of putting my energy into rewriting city press releases … I can plot by month incidences of property damage against temperature. So that would be the kind of work that I could do as a journalist – analysis of trends as opposed to the daily business of telling people about all the “mayhem” that is happening, when in reality it’s not really mayhem, but just a lot of routine stuff. …

Ann Arbor Reported Incidents March 2011-March 2013: Malicious Destruction of Property plotted against Temperature (Data from crimemapping.com and wunderground.com; chart by The Chronicle)

Ann Arbor Reported Incidents March 2011-March 2013: Malicious Destruction of Property (Data from crimemapping.com; chart by The Chronicle)

Ann Arbor Reported Incidents March 2011-March 2013: Home Invasion Forced Entry plotted against Temperature (Data from crimemapping.com and wunderground.com; chart by The Chronicle)

Askins: So back to this idea of just a data feed. How close would you be to implementing something like that?

Powers: I don’t know. You should ask the IT director!

Crawford: I don’t know either.

Askins: … I would love to be able to just offer readers a display of the standard data feed for the city of Ann Arbor for crime calls and the same for fire calls. So that you get reporting on 100% of fire calls and 100% of police calls.

Crawford: There’s a lot of calls we would have to assess: Are they real or not? … I mean as far as trying to conclude that there is actually an injury or an incident. A lot of calls, to be honest, might just be a cop calling in to get information. … It’s more complex than what’s on the surface.

Powers: What I said was meant to be more the external calls. Someone calls in about kids skateboarding in the parking garage, or suspicious youth near a dumpster and they think it might be graffiti. That’s what we’d share.

Askins: The follow-up piece would be when that incident is resolved, you can imagine a separate sharing of information by the city that this is how it was resolved. And you can go back and link to the original item in the feed. And you start to get a sense of what is normal and what is routine. There’s a certain amount of just background noise that’s happening – whether it’s kids acting up, or vehicles getting broken into, or people getting assaulted, I guess.

But typically what you see is only sort of the dramatic thing, the thing that is meant to scare you or make you concerned, and you get the impression there is bad stuff happening all the time. And it’s just that there is tons of stuff happening all the time, but a range of it.

Powers: Whether there is an objective survey with benchmarks or whether it’s providing the data, my point is that we’re going to be consistent. We’re not the ones alarming or minimizing threats and risks and dangers. If the council chooses, or if individual councilmembers choose to do that, that’s their decision. But from a perspective of the work plan, from the perspective of trying to help council move forward with their success statements, we see providing good comparison data as well as providing good data on activity and outcomes as very important to accomplishing that work plan.

415 W. Washington

Askins: So you mentioned that your perception at the work session was that the citizens survey had resonated with councilmembers. And I think that anybody who was watching the work session would agree that councilmembers seem like they’re interested in pursuing that.

On a different topic, at the work sessions at least, I didn’t really see any explicit discussion by the council – or body language or anything – on the capital budget allocation for reuse of 415 W. Washington [a city-owned property with with one large building and a few smaller structures, as well as an area currently used as a surface parking lot in the city's public parking system.] But that item got revised [between March 11 and March 25, so that the $650,000 originally included in the city's capital improvements plan for reuse of the property has been removed from that year's capital budget.]

So how would that – I would not call it a decision, yet – but how did that tentative proposal evolve? Was that councilmembers conveying their thoughts to you privately? Or was it the result of the physical testing that was done on the property?

Powers: It’s not done yet. So, no on the physical testing. … That project is a good example of Tom primarily – and … Craig Hupy [public services area administrator] – really working hard with discipline to accomplish the success statement that he was given as a part of his budget and financial responsibilities. And specifically, that was to get the fiscal year 2014 and 15 “into the box.” He been sharing with me some earlier drafts of the budget summary and we weren’t “in the box.” … As we came up to the day on March 25, he said, Hey, Powers, we’re really close – what do you want to do? We met with Craig Hupy, and this project was one where there’s some room to help us get into the box. And that’s what we shared with the council that evening. …

In hindsight, I didn’t take the opportunity to communicate it to council – that this is still a fluid project. Perhaps literally – if we get the report back saying that there is water six inches beneath the floor! But it was based on what we know today to help accomplish the fiscal discipline goal. … We also had a discussion with Hupy, about how we have these two properties … 721 N. Main and 415 W. Washington. And as we need to prioritize and focus our resources, as we need to start moving forward … on these parcels and properties that are surplus to the city’s needs, let’s start that through the budget – prioritizing where would I put our resources. That’s where we ended up with 415 W. Washington [not budgeted for reuse in the capital budget].

What’s Next

On April 15, the city council’s second meeting this month, Ann Arbor city administrator Steve Powers will be submitting to the council a proposed budget for fiscal year 2014. The council will have until its second meeting in May to make any amendments. This year that meeting falls on May 20. Those deadlines are set by the city charter. The 2014 fiscal year starts on July 1, 2013.

Through the spring the council has held a series of work sessions on the topic of the FY 2014 budget. It’s been decided that a possible additional city council budget work session for April 8 will not be scheduled.

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The Ann Arbor city council is beginning a budget planning process that should culminate in a council vote to adopt a fiscal year 2014 budget at its second meeting in May, which falls this year on May 20, 2013.

City administrator Steve Powers and chief financial officer Tom Crawford sketched out three kinds of topics they could explore with the full council at work sessions through the spring: (1) funding for items in the capital improvements plan (CIP); (2) budget impact analysis, broken down by service unit; and (3) additional resources required to support the city council’s five priority areas, which were  identified in a planning session late last year.

The top three priority areas are: (1) city budget and fiscal discipline; (2) public safety; and (3) infrastructure. Two additional areas were drawn from a raft of other possible issues as those to which the council wanted to devote time and energy over the next two years: (4) economic development; and (5) affordable housing.

Possible city council work session dates are the second and fourth Mondays of the month. Regular meetings fall on the first and third Mondays.

The city council will be adopting a final budget for fiscal year 2014 by its second meeting in May. FY 2014 starts on July 1, 2013. Although the council approves an annual budget for the next fiscal year, the city uses a two-year planning cycle. This year starts a new two-year cycle, the first complete one for city administrator Steve Powers, who started the job about a year and a half ago, in September of 2011.

During some back-and-forth with the budget committee about the staff’s ability to provide all the information to the council that the committee had been describing – within the timeframe of the budget season – Powers joked: “Tom and I aren’t rookies!” Powers was previously Marquette County administrator for 16 years. Crawford has served as Ann Arbor’s CFO for more than eight years.

The council’s five-member budget committee consists of: Sabra Briere (Ward 1), Jane Lumm (Ward 2), Christopher Taylor (Ward 3), Marcia Higgins (Ward 4) and Mike Anglin (Ward 5).

An interesting wrinkle that emerged during the budget committee’s discussion was the role to be played by the city council in shaping the capital improvements plan (CIP). In response to some interest expressed by committee members to amend the CIP, Powers encouraged them to think in terms of allocating funds (or not) for elements of the plan. That’s because the content of the CIP is the statutory responsibility of the planning commission, not of the city council. The city council’s role is to determine which projects should be funded, Powers explained. But it’s for the city planning commission to finalize the content of the CIP itself.

This report includes more on the Michigan Planning Enabling Act (Act 33 of 2008) and the city council’s recent history of amending the CIP.

Capital Improvements Plan: 2014-2019

The city’s planning commission has already voted, on Dec. 18, 2012, to approve the CIP for 2104-15. [.pdf of CIP for FY 2014-2019] The CIP is developed and updated each year, looking ahead at a six-year period, to help with financial planning for major projects – permanent infrastructure like buildings, utilities, transportation and parks. It’s intended to reflect the city’s priorities and needs, and serves as a guide to discern what projects are on the horizon.

This year, 377 projects are listed in 13 different asset categories. In the report, new projects are indicated with gray shading. They include renovating and/or remodeling five fire stations, 415 W. Washington site re-use, a park at 721 N. Main, urban park/plaza improvements, several street construction projects, a bike share program, and the design, study and construction of a new rail station.

Capital Improvements Plan: Amending the Plan?

Three years ago, on Feb. 16, 2010, the city council voted to amend the CIP after receiving it from the planning commission. On that occasion, the project that the council removed from the plan was one labeled the “Runway Safety Extension” for the city’s municipal airport.

The possible runway extension has been controversial for a few decades, but re-emerged again as a point of friction more recently in the context of an environmental assessment connected with the runway extension. [The runway extension is included again in this year's CIP.] The city council has voted periodically to fund the project, which taps non-local sources in addition to the smaller amounts needed from the city. The most recent vote by the council on that study came on Aug. 20, 2012.

Again on Feb. 7, 2011 city council amended the CIP to exclude the runway extension. Roger Fraser, who was city administrator at the time, hinted during the council’s meeting that the council was not actually expected to alter the plan itself [emphasis added]:

City administrator Roger Fraser noted that the planning commission is required to propose the CIP, but that not every item in the plan needs to have funding identified. Development of the plan, he said, complies with state law, and technically, the city council should simply be voting to receive the plan – implying that it was not really expected that the council would alter the plan.

Last year, on May 21, 2012, the council received the FY 2013-18 CIP attached to its agenda as a communication, and did not vote on it except to receive it along with several other communications. By that time, Powers had been serving as city administrator for about 9 months. The memo attached to the item on the agenda recited the past practice of amending the CIP, but noted that the city council did not need to act on the CIP [emphasis added]:

Similar to the City’s two-year budget process in which this year’s budget review by City Council consists of adjustments to the second year of the two-year budget presented to Council in the spring of 2011, the CIP approved by the Planning Commission consists of adjustments to the second year of the FY12-17 CIP approved by the Planning Commission on January 4, 2011. On February 7, 2011 City Council approved the FY12-17 CIP as the basis for the City’s capital budget, with the exception of the Airport Runway Safety Extension Project which was removed from the FY12 Capital Budget. As the adjustments to the CIP and to the capital budget under review by the Council were performed jointly, and with approval of the adjusted capital budget to be performed by Council following its review of the adjustments, no action regarding the CIP is required by City Council.

When Powers sketched out the overall concept for budget planning at the Jan. 22 meeting of the city council’s budget committee, Jane Lumm (Ward 2) expressed an interest in amending the CIP. She noted that when she’d served on the council in the mid-1990s, she recalled undertaking amendments to the CIP. And Sabra Briere (Ward 1) recalled the more recent amendments of the CIP with respect to the airport runway.

Powers responded by pointing out that the CIP was not the purview of the governing body – in this case, the city council – but rather of the planning commission. What the council was responsible for, Powers explained, was allocating funds (or not) for the projects in the CIP. Powers alluded to the relatively recent change in the statute that lays out the responsibilities of the city planning commission. He confirmed later for The Chronicle that he was referring to the Michigan Planning Enabling Act 33 of 2008, which reads in relevant part:

125.3865 Capital improvements program of public structures and improvements; preparation; basis.
Sec. 65. (1) To further the desirable future development of the local unit of government under the master plan, a planning commission, after adoption of a master plan, shall annually prepare a capital improvements program of public structures and improvements, unless the planning commission is exempted from this requirement by charter or otherwise. If the planning commission is exempted, the legislative body either shall prepare and adopt a capital improvements program, separate from or as a part of the annual budget, or shall delegate the preparation of the capital improvements program to the chief elected official or a nonelected administrative official, subject to final approval by the legislative body. The capital improvements program shall show those public structures and improvements, in the general order of their priority, that in the commission’s judgment will be needed or desirable and can be undertaken within the ensuing 6-year period. The capital improvements program shall be based upon the requirements of the local unit of government for all types of public structures and improvements. Consequently, each agency or department of the local unit of government with authority for public structures or improvements shall upon request furnish the planning commission with lists, plans, and estimates of time and cost of those public structures and improvements.

In the case of Ann Arbor, there’s no exemption of the planning commission from having responsibility for the CIP.

At the committee meeting, Briere observed that – from her perspective as the recently appointed city council member to the planning commission – she perceived that planning commissioners viewed the CIP as a document that could be altered by the city council, and thus commissioners viewed it in some sense as merely a recommendation by the commission. She ventured that Powers’ explanation of the respective roles of the planning commission (which is responsible for the content of the plan) and the council (which is responsible for the budgeting of specific projects in the plan) would need to be incorporated into the planning commission’s culture.

Water Mains in the CIP

At the budget committee meeting, Lumm indicated that her interest in amending the CIP stemmed from a desire to see a water main replacement project in her ward be funded for 2014 instead of 2015. And in the course of deliberations during the city council session that followed the budget committee meeting, Lumm’s Ward 2 council colleague Sally Petersen mentioned a water main replacement project she wanted the city to undertake. The two councilmembers confirmed for The Chronicle that the specific water main project they meant was on Yellowstone, which is in the eastern area of the city, bounded by the east-west portion of Green Road on the north, and Bluett Road on the south.

The CIP for FY 2014-19 includes the Yellowstone water main replacement for 2015, and indicates a cost of $650,000. The CIP includes more than 30 different water main projects citywide. Projects are ranked on a priority scale with a number of factor weights. Lumm wants to see the Yellowstone moved a year earlier – to 2014. She responded to a query from The Chronicle by indicating that the Yellowstone water main has had six breaks in a five-month period.

Based on data compiled by The Chronicle from the city’s comprehensive annual financial reports (CAFRs), total water main breaks citywide in the last four years are less frequent per year than in the previous three. In 2012 there were 72 water main breaks citywide.

City of Ann Arbor water main breaks: 2006-2012. Data from city of Ann Arbor comprehensive annual financial reports.

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