This is another edition of the go!pass, subsidized by the Ann Arbor Downtown Development Authority. A swipe through the fare box of an AAATA bus lets its holder ride AAATA buses an unlimited number of times.

Their fares will be paid by the Ann Arbor Downtown Development Authority – out of $674,264 that the DDA board has authorized to support the Ann Arbor Area Transportation Authority’s getDowntown program.

That amount includes operational and administrative overhead as well as reimbursements for fares. DDA board action came at its April 2, 2014 meeting. DDA board member Al McWilliams abstained from the vote, noting that getDowntown is a client of his marketing firm, Quack!Media.

The DDA has funded the program for more than a decade.

Under the rules of the program, a business or organization located within the DDA’s tax capture district can purchase bus passes for its employees for a nominal $10 apiece.

However, an “all-in” rule of the program requires that passes must be purchased for all employees, whether the passes will be used by every employee or not.

The DDA reimburses the AAATA based on the actual use of go!passes, which has shown steady increases over the last 10 years:

Fixed-route AAATA ridership by year for rides taken under the getDowntown go!pass program (red). (Data from AAATA, charted by The Chronicle.)

As a fraction of total rides taken on the AAATA, go!pass rides account for about 10%. The amount reimbursed by the DDA per go!pass use is $0.90. A “use” is a boarding of a bus, not a “connected trip.”

If a go!pass holder has a commute that involves a transfer from one bus route to another, then commuting both ways to work – which would count as just two connected trips – would generate a total of four boardings. The $0.90 go!pass cost per boarding is based on the number of boardings an average holder of the AAATA’s 30-day pass makes – divided into the cost for such a pass. A 30-day pass, with unlimited boardings, is available to anyone and costs $58. A holder of a 30-day pass who commutes both ways to work five days a week, using routes that require a transfer, would effectively be paying $0.64 per boarding [58/(22.667*4)]. Transfers don’t cost any extra on the AAATA system – so compared to the $1.50 full fare, such a rider would be paying $1.30 per trip.

A breakdown of the specific costs the DDA board agreed to fund in its April 2 action includes the following, which amounts to $674,264 for FY 2015, compared to $610,662 in FY 2014. The amounts allocated last year for each item are indicated in square brackets. Descriptions are summarized from getDowntown descriptions.

• getDowntown: [$40,488] $40,000. Support for programs, services, outreach and marketing to encourage downtown employers/employees to use transportation alternatives. 2015 Survey of Decision Makers and Employers.
• go!pass: [$479,000] $529,000. Transit incentive for employees. Cost increase due to estimated 5% increase in ridership over FY 2014. Reimbursement is $.90 per ride.
• NightRide improvements and go!pass discount: [$18,233] $20,500. For evening employees who depend on transit to get to work. Increase in amount reflects an increased demand for service and increase in ridership.
• Route #4 Washtenaw enhanced service: [$56,363] $57,772. Bus route with highest downtown employee ridership. The increase reflects a 2.5% cost of living increase due to increase in diesel fuel cost and operator wages.
• Route #5 Packard enhanced service: [$16,578] $16,992. Route used by significant numbers of downtown employees. The increase reflects a 2.5% cost of living increase due to increase in diesel fuel cost and operator wages.
• ExpressRide go!pass discount: [$0] $10,000. Service from Canton and Chelsea to Ann Arbor.

This brief was filed from the DDA offices at 150 S. Fifth Ave., where the DDA board holds its meetings. A more detailed report of the meeting will follow: [link]

Fixed-route AAATA ridership by year and by category: no additional subsidy (blue); go!pass downtown employees (red); University of Michigan affiliates (yellow). (Data from AAATA, charted by The Chronicle.)

If it’s approved, the five-year millage will be used to pay for a range of service increases, focused on increased frequency for some existing routes, new routes, longer hours of operation and added hours on weekends.

In that context, I think it’s worthwhile to start getting a firmer grip on current ridership levels and historical trends.

In the last 10 years, AAATA fixed-route ridership – the “regular bus,” as contrasted with paratransit services – has grown from 4.2 million in fiscal year 2004 to 6.4 million rides in 2013. That’s about 50% growth.

And ridership in FY 2013 was consistent with that continued upward trend. But the trend this year was just slightly upward: The 6.4 million fixed-route rides provided in 2013 was barely up from 6.35 million rides in 2012 – about a 0.8% increase.

Two programs that offer financial subsidies to passengers – MRide and go!pass – showed a greater increase in ridership than the most recent overall trend. Rides taken on AAATA buses through the University of Michigan’s MRide program showed an increase of about 5% between 2012 and 2013 – from 2.61 million to 2.74 million rides. And rides taken with the go!pass, funded in largest part by the Ann Arbor Downtown Development Authority – increased about 4% between 2012 and 2013 – from 604,000 to 629,000 rides.

I’m going to use the term “out-of-pocket ridership” for those rides not supported through an additional subsidy from the go!pass or MRide programs. Out-of-pocket ridership actually showed a decrease of about 3% from 2012 to 2013 – from 3.15 million to 3.04 million rides.

A more detailed look at the historical ridership data by category has implications, I think, for reasonable community expectations for future out-of-pocket ridership – if a millage is approved and service improvements are implemented. And that more detailed look also has implications for a reasonable basis for negotiations between AAATA and the University of Michigan on the financial component of the MRide deal.

Here’s a quick summary of my thoughts. I think the success of the five-year improvement plan should be measured in part by increases in out-of-pocket ridership. I think the MRide agreement between UM and the AAATA should include not just a fare component but also a component to cover UM’s “local share.” And I think the go!pass program should be conceived as a tool to help increase general out-of-pocket ridership, not just serve to benefit people who have a formal affiliation with downtown Ann Arbor.

You’ll find a more detailed analysis of these issues below the fold. This column also includes more charts – and even some maps with colored dots.

What Fuels Upward Ridership Trend: Price or Quality?

Before considering Ann Arbor’s local ridership statistics, it’s worth looking at some national numbers to check for any clear trends. Chart 1 below summarizes statistics from the American Public Transportation Association (APTA). After a somewhat downward trend for total public transportation ridership from 1990 through 1996, total ridership has shown a slight but steady upward trend. In particular, the most recent nine-year period (indicated with the vertical black bar) shows year-to-year increases since 2004 in every year but two – 2009 and 2010.

Chart 1: Public transportation ridership by year and by mode. (Data from American Public Transportation Association http://www.apta.com, charted by The Chronicle.)

From Chart 1 above, it’s also clear that bus and heavy rail are the two major categories of public transportation. It’s easy enough to scan Chart 1 to see that heavy rail (blue) shows an increasing trend since 2004. Less clear in Chart 1, however, is the slight downward trend in ridership for bus transportation. That downward trend is more readily apparent in Chart 2 below, which plots each mode separately, instead of stacked in bars.

Chart 2: Public transportation data by year and by mode. (Data from American Transportation Association http://www.apta.com, charted by The Chronicle.)

Even while national public transportation trends for bus ridership are slightly downward for the most recent decade, public bus ridership in Ann Arbor is strongly upward. AAATA’s ridership on fixed-route buses has grown about 50% in the last decade – from 4.2 million in fiscal year 2004 to 6.4 million rides in 2013. Chart 3 shows that upward trend and reflects a two-year dip similar to the national trend:

Chart 3: Fixed-route AAATA ridership by year and by category. (Data from AAATA, charted by The Chronicle.)

But that upward trend is not uniform for out-of-pocket ridership and two programs that offer subsidized fares – MRide and go!pass. The University of Michigan pays a fare on behalf of its affiliates (faculty, staff, students) through the MRide program. UM affiliates can board buses simply by swiping their M-Cards in the fare boxes on AAATA buses. The go!pass program is a benefit for employees of businesses located in the Ann Arbor Downtown Development Authority’s tax increment finance (TIF) capture district. Business owners can purchase a go!pass for their employees for $10 apiece – which allows downtown employees unlimited rides for a year. The bulk of the cost to provide go!pass rides is covered by a grant from the Ann Arbor DDA to the AAATA.

Chart 4 below presents the same data as Chart 3 – but broken down by out-of-pocket ridership (blue), go!pass rides (red) and MRide rides (yellow).

Chart 4: Fixed-route AAATA ridership by year and by category: no additional subsidy (blue); go!pass downtown employees (red); University of Michigan affiliates (yellow). (Data from AAATA, charted by The Chronicle.)

It’s plain from cursory inspection of Chart 4 that from 2004 to 2005, out-of-pocket ridership (blue bars) dropped precipitously. But that’s just a function of the fact that the MRide program launched in August 2004 – so FY 2004 included just two months worth of MRide data. [The AAATA fiscal year runs from October through September.] From that drop, it’s evident that even before the MRide program launched, many UM affiliates were already riding AAATA buses, but paying their own fares.

Chart 5 below isolates the same out-of-pocket ridership data presented in Chart 4. Looking back over the last decade, the trend for out-of-pocket ridership is flattish to slightly upward. Out-of-pocket ridership increased by 11% between 2005 to 2006 – from 2.65 million to 2.95 million. But over the next eight-year span, out-of-pocket ridership increased by a total of just 3% – from 2.95 million in 2006 to 3.04 million in 2013.

Chart 5: Fixed-route AAATA ridership by year for out-of-pocket rides – those taken with no additional subsidy (blue). (Data from AAATA, charted by The Chronicle.)

In contrast to the flattish out-of-pocket ridership trend, the number of rides taken with an additional subsidy through the go!pass program has more than doubled – from 296,855 in 2004 to 628,959 in 2013. When the same go!pass ridership data from Chart 4 is isolated, as in Chart 6 below, the increasing trend is more evident:

Chart 6: Fixed-route AAATA ridership by year for rides taken under the getDowntown go!pass program (red). (Data from AAATA, charted by The Chronicle.)

As a fraction of total rides taken on the AAATA, go!pass rides account for about 10%. So despite the dramatic growth in go!pass ridership, the impact of that growth on total ridership is limited.

Compared to the go!pass program, UM ridership has not grown as much percentage-wise, but has still shown robust increases. From the first full year of the program, rides taken under MRide have increased by 57% – from  1,744,718 in 2005 to 2,736,848 in 2013. The MRide data is isolated in Chart 7:

Chart 7: Fixed-route AAATA ridership by year for rides taken under the University of Michigan MRide program (yellow). (Data from AAATA, charted by The Chronicle.)

Because the number of rides taken under the MRide program is such a substantial percentage of the total rides – about 43% in 2013 – the robust growth in the MRide program also results in growth for total rides.

To summarize, even though total AAATA fixed route ridership has shown a robust increase over the last decade, not much of that growth is attributable to out-of-pocket ridership. Most of the ridership growth during that period is attributable to rides that receive an additional subsidy – through the go!pass or MRide programs.

That summary provides a competing narrative to the one that the AAATA has given in connection with a recently completed analysis of peer transit agencies. That analysis was presented to the AAATA board at its  Nov. 21, 2013 meeting. The peer analysis showed an 18% higher-than-average cost per service hour than peer agencies. That comparison is presented in Chart 8:

Chart 8: AAATA Operating Expense per Revenue Hour compared against FTIS Top 20 peers. Top 20 peers to AAATA are based on Florida Transit Information System (FTIS) analysis. Data from Integrated National Transit Database Analysis System (INTDAS), developed for Florida Department of Transportation by Lehman Center for Transportation Research, Florida International University, http://www.ftis.org/intdas.html, accessed Nov. 22, 2013.

However, the AAATA calculates that the number of rides per service hour is 50% higher than the peer median. That peer comparison is presented in Chart 9:

Chart 9: AAATA Passenger Trips per Revenue Hour compared against FTIS Top 20 peers. Top 20 peers to AAATA based on Florida Transit Information System (FTIS) analysis. Data from Integrated National Transit Database Analysis System (INTDAS), developed for Florida Department of Transportation by Lehman Center for Transportation Research, Florida International University, http://www.ftis.org/intdas.html, accessed Nov. 22, 2013.

And the greater-than-average riders per hour leads to a 17% lower operating expense per trip than the peer group median. The operating expense per trip peer comparison is presented in Chart 10:

Chart 10: AAATA Operating Expense per Trip compared against FTIS Top 20 peers. Top 20 peers to AAATA based on Florida Transit Information System (FTIS) analysis. Data from Integrated National Transit Database Analysis System (INTDAS), developed for Florida Department of Transportation by Lehman Center for Transportation Research, Florida International University, http://www.ftis.org/intdas.html, accessed Nov. 22, 2013.

To summarize the peer comparison analysis, even though AAATA’s cost per service hour is higher, the number of riders is also higher, which results in a lower cost per rider than the AAATA’s peer agencies. The narrative the AAATA has offered to account for this data is: “Investment in quality service pays off in ridership.” That is:

Narrative 1: Passengers are attracted to ride AAATA buses in greater numbers – because of the quality of AAATA’s service.

But a different narrative is suggested by the historical trends in ridership growth – which is concentrated in those categories that receive a fare subsidy. That alternate narrative is this:

Narrative 2: Passengers are attracted to ride AAATA buses – because a third party is paying for a large portion of AAATA fares.

Bearing in mind those narratives, let’s look ahead to the possible approval of a new transit millage and the implementation of higher quality service – like increased frequency, and extended and added hours of service. I think it’s fair to measure success of the five-year transportation improvement program by the evidence for Narrative 1 that we might see over the course of the next five years.

The kind of evidence we should expect to see, especially if Narrative 1 is true, is an increase in AAATA’s out-of-pocket ridership.

Success Statement: Out-of-pocket ridership will increase over the period of the five-year improvement plan.

In terms of the charts I’ve reviewed so far, that translates into taller blue bars in Chart 5, which I’m repeating here to save scrolling:

Chart 5: Fixed-route AAATA ridership by year for out-of-pocket rides – those taken with no additional subsidy (blue). (Data from AAATA, charted by The Chronicle.)

More on the AAATA’s Largest Customer: UM

If growth in AAATA ridership over the last decade is largely a function of increased ridership by University of Michigan affiliates, then it makes sense to ask why the university ridership has increased over this period.

At least part of the increase appears to be a function of an increased number of university employees and students. The total number of Ann Arbor campus employees (including the hospital) has increased by 20% over the last nine years – from 35,137 in 2005 to 42,277 in 2013. Most of the added jobs have been in the university’s hospital system. The employee numbers are presented in Chart 11:

Chart 11: Ann Arbor campus University of Michigan employee head counts – hospital (lighter green) and excluding hospital (medium green). (Data from AAATA and University of Michigan, charted by The Chronicle.)

Although their numbers haven’t increased as much over the same period, the student population (including graduate students) has increased by 10% – from 38,219 in 2005 to 42,348 in 2013.

The roughly 15% increase in total number of UM affiliates compares with a 57% increase in ridership under the MRide program – from  1,744,718 in 2005 to 2,736,848 in 2013. So trips made under the MRide program have increased at a greater rate than the increase in number of UM affiliates. Ridership is plotted against university affiliate numbers in Chart 12:

Chart 12: Ann Arbor campus University of Michigan affiliate head counts: employees (light green) and students (dark green) plotted with MRide trips. (Data from AAATA and University of Michigan, charted by The Chronicle.)

In any case, as the university continues to add jobs and students, it’s reasonable to expect that rides taken on AAATA buses by university affiliates will make up an increasing percentage of total rides taken on the system. In 2013 that percentage was about 43% – up from about 37% in 2005.

One consequence of that proportionally heavy university ridership is this: The seasonal pattern of university ridership is felt in the bus system as a whole.

To see that impact, let’s start with Chart 13 below, which is a year-over-year plot of monthly ridership. It reveals the seasonal pattern among the total AAATA ridership:

Chart 13: Total Fixed-route AAATA ridership by month and year. (Data from AAATA, charted by The Chronicle.)

The basic pattern discernible in Chart 13 is a peak ridership in September and October of each year, followed by decreases in November and December. In January, ridership levels recover and are sustained through about April, when the levels decrease and remain at a lower level through July and August.

That’s not the same seasonable pattern as the one shown in Chart 14 among go!pass holders, which drops from October to November then shows a gradual rise through the rest of the fiscal year:

Chart 14: Fixed-route AAATA ridership by month and year for rides taken under the go!pass program. (Data from AAATA, charted by The Chronicle.)

Given the relatively lower percentage of trips taken by go!pass riders, it’s reasonable that the go!pass seasonal pattern does not have a discernible impact on the overall seasonal plot in Chart 13.

But the seasonable pattern among university affiliates does appear to have a clear impact on the overall seasonal pattern. That conclusion is based on comparison of the seasonal pattern for UM ridership alone, which is shown in Chart 15, with the seasonal pattern by non-UM affiliates and non-go!pass riders, which is shown in Chart 16:

Chart 15: Fixed-route AAATA ridership by month and year for rides taken under the MRide program. (Data from AAATA, charted by The Chronicle.)

Chart 16: Fixed-route AAATA ridership by month and year for rides with no additional subsidy. (Data from AAATA, charted by The Chronicle.)

Comparing Charts 15 and 16 with Chart 13, it appears that the overall seasonal ridership pattern is inherited from the seasonal pattern of university riders. That hints at the possibility that the majority of rides under the MRide program are taken by the most highly seasonal component of university affiliates – students. That’s confirmed by the actual breakdown provided to The Chronicle by the University of Michigan for one period of sampling, which is presented in Chart 17:

Chart 17: MRide trips broken down by affiliate type.

Policy Implications for MRide Agreement: Fund the Local Share

The seasonal nature of the impact of UM ridership and the student-dominated nature of that ridership has potential implications, I think, for how the MRide deal between the university and the AAATA should be structured.

Under the current arrangement, the university pays a fare of $1 per ride to the AAATA. [I'm going to gloss over one wrinkle involving the federal grant received by UM for operation of its own blue bus system, which the university uses to defray its cash costs to cover the $1 fares for its affiliates.]

The full cash fare for a one-off ride on the AAATA is $1.50. The rational basis for the $1 per ride that UM pays is this: Riding the bus two trips every day of a 30-day period (60 rides) would result in a total full cash fare cost of $90; but someone could just as well purchase a 30-day flex pass for $58, which is roughly 2/3 the cost of paying the full cash fare each time they board the bus. Two-thirds of $1.50 is $1. QED.

I’m not persuaded that consideration of the hypothetical rides taken by 30-day flex pass holders is the best rational basis for establishing the fare per ride paid by UM to AAATA.

But rather than focusing on the amount of the fare, I think it’s more important to frame the question in terms of the typical funding model for public transportation in America – of which fares are just one component. The other three major components are local taxes, state assistance and federal assistance.

Broadly speaking, fares cover something less than a quarter of the AAATA’s expenses. Here’s a breakdown of revenues from the approved AAATA budget for the current fiscal year:

Chart 18: AAATA FY 2014 Budget: Revenue. (Chart by The Chronicle with data from AAATA.)

When the AAATA contemplates arrangements to provide transportation services to other jurisdictions – like Pittsfield Township, for example – that negotiation is not about fares that the jurisdiction would pay on behalf of its residents. When the AAATA reaches an agreement with the township, the amount paid by the township covers the “local share” – the darker blue wedge of the funding pie indicated in Chart 18 under POSA (purchase of service agreement). The money paid by the township to the AAATA under a POSA is analogous to the tax that Ann Arbor property owners pay. Pittsfield Township property owners don’t pay a local transit tax like Ann Arbor residents, so the township pays a POSA instead. Pittsfield Township passengers still pay their own fares.

So when the AAATA talks to UM about fares, it’s a completely different conversation from the one the AAATA has with the township. The conversation with UM is about fares. But the conversation with Pittsfield Township is about “local share.” So how is the University of Michigan different from Pittsfield Township?

In one important respect, the University of Michigan is no different from Pittsfield Township – because no property taxes are paid by UM. If UM did pay taxes on its property – which has roughly $1 billion of estimated taxable value – the roughly 2 mill Ann Arbor transit tax would generate about $2 million annually. Based on that observation, I would be eager to consider a way to add coverage of some “local share” to the MRide agreement – so that both fares and local share would be addressed. That’s reasonable, given the typical funding model for public transportation.

On the other hand, it’s inconceivable to me that the AAATA should or would contemplate asking a church – a tax-exempt entity just like UM – to pay a “local share” in addition to whatever fares are paid, so that the cost of bus rides taken by its congregants to attend church would be covered.

To find some kind of middle ground – between UM-as-township and UM-as-church – I think it’s worth being more thoughtful about specific UM riders. Instead of thinking about “UM affiliates” as an unanalyzable block, it would be useful to think about the funding issue in terms of rider profiles.

Consider Dan, a university employee who lives within the city limits. I’d be willing to count the “local share” for Dan’s MRide trips as covered by the transit taxes he or his landlord pays. So UM could reasonably contend that only Dan’s fare needs to be a part of the MRide funding negotiation. Analyzed in the same way would be a non-city resident, Fran, who commutes to work at a facility leased by the UM from a private entity. That is, the property taxes paid by the UM’s landlord would count as covering the ”local share” of Fran’s MRide trips. Only Fran’s fares would be subject to negotiations on the MRide agreement.

And there’s nothing special about students per se when considering rider profiles in this way. It’s not important whether a UM affiliate is a student, but rather that their place of residence generates tax revenue. If UM student Stan rents a house, then the transit tax paid by his landlord can count as the “local share” for his MRide trips. Only Stan’s fare needs to be a part of the MRide agreement negotiations.

But UM students who live in dormitories should be analyzed differently, I think. If Mary lives in a UM dormitory, which doesn’t generate any tax revenue, then her trips taken under MRide don’t currently have a funded “local share.” That’s what makes UM different from a church: Churches don’t maintain large residential complexes with a population that need services. And that’s one reason why it’s reasonable to treat UM differently from a church.

It’s also reasonable to treat UM differently from a church because of the sheer volume of UM affiliates, the majority of whom are students, who ride AAATA buses. Given that the volume of UM bus riders has a significant impact on the seasonal ridership patterns overall, it’s reasonable to treat UM differently from a church.

The current agreement between AAATA and UM covering funding for MRide was ratified by the AAATA board on Sept. 16, 2010 and runs for five years, through 2015. So it’s not too early to start thinking about how the negotiations on an extension of the agreement might be framed.

Policy Point 1: The MRide agreement between the University of Michigan and AAATA should include a component to acknowledge “local share” in addition to fares.

Usefulness of Ride-Level Data: go!pass Data Illustration

To implement an MRide agreement based on the kind of profiles I’ve contemplated above would, I think, be straightforward – even if it would require some work. That work would include making sure that the relevant profile data for the basis of MRide local share funding is encoded in all UM affiliate M-Cards. The fare boxes used on AAATA buses would collect that profile data from passenger M-Cards when they board AAATA buses and swipe them through the fare box.

The GFI Genfare fare boxes used by the AAATA can collect all sorts of data, including longitude and latitude of the boarding location.

I’ll illustrate the usefulness of this kind of information with boarding data from the go!pass program – partly because that’s the data I have. But the go!pass data is interesting in its own right.

I plotted out a set of go!pass boarding locations – collected from November 2012 through October 2013. Locational data was missing from some of the boardings, but the dataset included 571,792 rides with valid lat-long coordinates. Those coordinates correspond to the location where the boarding took place. As a coarse-grained technique to collect the locations into groupings, I truncated the lat-long values at four decimal places (reduced from 8 places) and colorized the dots based on frequency of boardings. That’s the plot in Map 19 [link to dynamic map]:

Map 19: go!pass boardings from November 2012 to October 2013. N=571,792. About 30% of go!pass riders during that period boarded the bus east of US-23. (Data from getDowntown. Mapping by The Chronicle.) A zoomable version of this map is available at http://geocommons.com/maps/326684

First, the plot illustrates the fact that the AAATA bus service already lives up to the part of the authority’s new name – the Ann Arbor Area Transportation Authority. It’s clear that downtown employees are boarding the bus at myriad locations outside the city of Ann Arbor.

If you click through to visit the dynamic version of the map, you’ll notice that it takes several seconds to load. First to load are the boarding locations east of the intersection of Washtenaw Avenue and US-23. About 30% of go!pass boardings are located east of US-23.

Let’s assume that in most cases a boarding east of US-23 is by a non-city resident inbound toward Ann Arbor, and that the east-of-US-23 boarding is paired with a downtown Ann Arbor boarding on the same day. From those assumptions, it’s plausible to conclude that more than half (30% times two) of the bus rides taken under the go!pass program are by passengers who live outside the city of Ann Arbor and commute to work in downtown Ann Arbor.

In Map 20, the Blake Transit Center’s location emerges in the plot of boarding locations between Fourth and Fifth Avenues north of William. But clearly the BTC is not the only place people get on the bus in downtown Ann Arbor:

Map 20: Downtown Ann Arbor go!pass boardings.

At an Ann Arbor Downtown Development Authority retreat on Jan. 30, 2014, board member Al McWilliams described a grand vision, which he allowed was unattainable, of Ann Arbor as a carless zone. Visitors who arrived to Ann Arbor would leave their private vehicles on the periphery and take public transportation into the city.

The dynamic described by McWilliams is already a reality in a very limited way – through the AAATA’s park-and-ride lots. Results from a recent survey of downtown commuters indicated that 8% of the people who responded said they drive part way and then take the bus the rest of the way to work. About that 8% of respondents, the report from CJI Research concludes that the point from which they take the bus is “presumably from a park and ride location.” Data from go!pass boarding swipes makes it possible to start validating that assumption.

At least some go!pass riders take advantage of officially designated park-and-ride lots. That’s illustrated in Maps 21, 22 and 23:

Map 21: Miller Road park-and-ride location.

May 22: Pioneer High School park-and-ride

Map 23: Plymouth and US-23 park-and-ride.

But the dataset I plotted suggests that there could be other locations that are potentially being used as informal park-and-ride lots by go!pass commuters. The year’s worth of boarding data showed Meijer at Carpenter and Ellsworth recorded about 8,000 boardings. And Fountain Plaza near Washtenaw Avenue and Golfside recorded more than 4,000 boardings. Neither of those locations are part of the AAATA’s park-and-ride program. High frequency boarding locations are shown in Map 24 [link to dynamic map]:

Map 24: High frequency boarding locations (more than 2,500 boardings in a year). Highlighted with pink arrows are Meijer at Carpenter and Ellsworth and Fountain Plaza near Washtenaw Avenue and Golfside.

It’s also possible that those locations are not necessarily being used as informal park-and-ride lots for work commuting purposes – but rather are simply shopping destinations for some go!pass holders.

That’s a possibility that highlights the conditions for use of go!passes. Namely, they’re not just for commuting to work. Using a go!pass to run shopping errands is completely within the parameters of the program.

And that’s an opening to make a point I’ve written about before: The DDA should consider extending the benefits of go!passes more broadly than just to downtown employees. At the DDA board retreat on Jan. 30, 2014, board chair Sandi Smith floated the idea of a go!pass for downtown residents as well as employees. I count as progress the fact that any DDA board member is reflecting on what kind of transportation program the DDA would like to fund.

In a column written over a year ago, I argued for extending the go!pass benefit generally to Ann Arbor transit taxpayers – but reducing the amount of the subsidy. I won’t repeat those arguments here. But some readers might wonder why I think the DDA could legally fund activity outside the downtown district. It’s because the roughly $500,000 annual go!pass subsidy is funded out of revenue collected in the public parking system, which the DDA manages. That is, the go!pass is not funded with tax increment finance (TIF) revenue.

So from a legal perspective, if it’s legal for the DDA to turn over 17% of the gross revenue from the parking system to the city of Ann Arbor to use wherever in the city it likes – as the DDA does now under the terms of its contract with the city – then it’s legal to fund a city-wide transportation pass with public parking revenue.

Or if the DDA is committed to providing an additional transportation subsidy only to those people who have a connection to downtown, then that connection could be defined simply as “boarded the bus in the DDA district.” Imagine a go!pass distributed with every tax bill – a transportation pass for which users could purchase additional rides by using an online interface. And imagine that every month, when a user logs on to review their account, there’s a message that reads something like: “You boarded the bus 15 times in the DDA district. This month the DDA is able to pay for 10 of those rides.” That’s a program that could support not just downtown workers, but also downtown residents and downtown shoppers.

Ultimately, I think that programs similar to the go!pass could be used as a tool to help boost out-of-pocket ridership. And that’s important, because I think that’s part of the way we should measure the future success of AAATA service.

Policy Point 2: The DDA should consider using Ann Arbor public parking system revenue to fund a transportation pass with broader eligibility than just downtown employees.

A Big Pile of Data

Around this time of year, The Chronicle has historically published a transit data roundup, adding the most recent set of ridership data to the set we’ve been gradually compiling. For this column, I’ve left out Amtrak ridership – because the five-year transit improvement plan is not supposed to involve any rail-based service. And the five-year transit improvement plan is focused strictly on the immediately adjacent geographic vicinity of Ann Arbor.

And this year I’ve written the annual data roundup as a column, because data mostly does not speak for itself. But data does repeat itself, and so will I. Again, here’s what I conclude based on this big pile of data.

I think the success of the AAATA’s five-year improvement plan should be measured in part by increases in out-of-pocket ridership. I think the MRide agreement between UM and the AAATA should include not just a fare component but also a component to cover UM’s “local share.” And I think the go!pass program should be conceived as a tool to help increase general out-of-pocket ridership, not just serve to benefit people who have a formal affiliation with downtown Ann Arbor.

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Ann Arbor Downtown Development Authority board member Keith Orr delivered extended remarks in response to a proposal currently being weighed by the Ann Arbor city council that would amend the city’s ordinance governing the DDA. (Photos by the writer.)

The grant award had come at the request of AAHC executive director Jennifer L. Hall, who’s proposing a major change to the way the 360 units of public housing are administered. The approach involves privatization and project-based vouchers.

The DDA’s support for public housing also surfaced at the meeting as a talking point for board members in the context of a proposal being considered by the Ann Arbor city council – which would amend the city ordinance regulating how the DDA’s tax increment finance (TIF) capture works. The amendments would clarify existing language in the city ordinance in a way that would favor the other taxing authorities, whose taxes are captured as a part of the DDA’s TIF. The council postponed action on that proposal at its March 4, 2013 meeting. In that context, at the DDA’s March 6 meeting, board member Sandi Smith raised the specter that the DDA would in the future not be able to support affordable housing in the same way it has done in the past.

In addition to clarifying the question of how TIF is calculated, the amendments would prevent elected officials from serving on the board and would impose term limits for board service. Board members took turns at the start of the meeting arguing that the DDA had been a good steward of public dollars and that the amendments to the ordinance are not warranted. Board members indicated that they didn’t think their service as volunteer members of a board was being afforded adequate respect by the city council.

The board comments followed a turn at public commentary at the start of the meeting from Brendan Cavendar of Colliers International, a commercial real estate services firm. His commentary departed from the typical pattern of someone signing up to address the board for up to four minutes. Instead, Cavendar had been invited to appear, and responded to prompts from board members to deliver a range of positive responses, including: future tenancy of the former Borders location; rising rents in the downtown area; and affirmation of the importance of the downtown public parking system.

The city’s public parking system is managed by the Ann Arbor DDA under a contract with the city of Ann Arbor. The monthly parking usage report is featured at every board meeting. But the March 6 meeting featured the parking system in an additional way. The board decided to award the full $50,000 of a discretionary management incentive to the DDA’s subcontractor – Republic Parking – for operation of the public parking system. It’s an annual decision, but it’s the first time in the last five years that the full amount has been awarded. The decision was based on good performance on metrics tracked by the DDA, according to the board.

In a third voting item, the board authorized $610,662 in support of getDowntown’s go!pass program, which provides a subsidy to cover the cost of rides taken on Ann Arbor Transportation Authority buses by employees of participating downtown businesses. To participate, a business must purchase a go!pass for all employees, at an annual cost of $10 per employee. Roughly 6,500 downtown employees are provided with go!passes through the program.

Baker Commons Grant

The DDA board was asked to consider a $300,000 grant to the Ann Arbor Housing Commission for repairs and renovation of the Baker Commons building, located in downtown Ann Arbor at Packard and Main.

The $300,000 will be used for a range of capital improvements to the 64-unit building: driveway and sidewalk replacement and repair; installation of energy-efficient lighting; insulation and air sealing; window replacement; adding a second entrance; door replacement; upgrade of fixtures appliances, flooring and cabinetry; replacement of heating and cooling units; generator replacement, elevator replacement, upgrade of common area furniture, and installation of additional security cameras.

This grant for $300,000 to Baker Commons comes in addition to a recent $260,000 grant from the DDA – authorized by the board at its Oct. 3, 2012 meeting – primarily for the replacement of the Baker Commons roof.

Jennifer Hall, executive director of the housing commission, was unable to attend the board’s March 6 meeting due to illness, according to DDA board chair Leah Gunn. Hall estimates that Baker Commons needs about $3 million in capital investments. She made the request of the DDA in conjunction with a request to the city of Ann Arbor – for $500,000. The DDA’s contribution taps its housing fund, which gets its revenue from the DDA’s tax increment finance capture (TIF) fund.

The city of Ann Arbor is being asked to tap the fund balance in the city’s affordable housing trust fund for half the $500,000. That use of the city’s affordable housing trust fund has been recommended by the city’s housing and human service advisory board (HHSAB). The other half is hoped to come from federal community development block grant (CDBG) funding, allocated through the Washtenaw Urban County.

The redevelopment of Baker Commons comes in the context of a broader effort Hall is undertaking to redevelop all of the Ann Arbor Housing Commission’s 360 units, distributed across the city. Baker Commons is the only AAHC housing complex in the downtown area. The overall redevelopment effort being pursued by Hall would privatize Ann Arbor’s public housing, converting the properties to project-based vouchers, which would make them eligible for low-income housing tax credit financing. For detailed coverage of this effort, see: “Round 3 FY 2014: Housing Commission.”

Baker Commons Grant: Board Deliberations

Board member John Mouat alerted his colleagues to the fact that his firm, Mitchell and Mouat Architects, is working with the housing commission on the rehabilitation of its properties, so he’d need to abstain from the vote.

Board chair Leah Gunn observed that the grant directly affects city-owned infrastructure. [The housing commission properties are owned by the city of Ann Arbor, unlike the property of most housing commissions. It's a factor affecting the AAHC's ability to convert its public housing units to project-based vouchers – because the city council will need to approve a deed transfer.] Mayor John Hieftje took the opportunity of the vote to note that the city of Ann Arbor contributes money to support human services. He continued by saying he didn’t think there was any organization that contributes as much to affordable housing as the DDA does. [Julie Steiner, executive director of the Ann Arbor Housing Alliance, has circulated a letter outlining the DDA's history of support for affordable housing (.pdf of March 7, 2013 letter)] Hieftje also noted that the AAHC has turned things around recently. [The organization has emerged from "troubled status."]

Keith Orr noted that the DDA grant would help the AAHC comply with requirements of the federal project-based voucher program, to which Hall wants to transition. [Orr was alluding to the fact that the transition to project-based vouchers requires that all the AAHC be brought up to minimum standards – which can be accomplished partly through an infusion of low-income tax credit financing, or by any other means. Hall has indicated that she'll be pursuing several options, including grants. The request to the DDA was one example of that.]

Outcome: The board voted unanimously to approve the $300,000 grant for renovation of Baker Commons.

DDA Ordinance Changes

The DDA’s support of affordable housing factored into DDA board remarks on proposed ordinance changes affecting the DDA. The remarks came before the vote on the Baker Commons grant.

At its March 4, 2013 meeting, two days before the DDA board meeting, the Ann Arbor city council considered several revisions to a city ordinance governing the Ann Arbor Downtown Development Authority (DDA). The city ordinance on the DDA is in Chapter 7. DDA board members did not embrace the proposed changes at their March 6 meeting. This report first presents some background, followed by DDA board member comments.

DDA Ordinance Changes: Background

Among the revisions to Chapter 7 that are being considered by the council are: a new prohibition against elected officials serving on the DDA board; term limits on DDA board members; a new requirement that the DDA submit its annual report to the city in early January; and a requirement that all taxes captured by the DDA be spent on projects that directly benefit property in the DDA tax increment finance (TIF) district.

But most significant of the revisions would be those that clarify how the DDA’s TIF capture is calculated. The “increment” in a tax increment finance district refers to the difference between the initial value of a property and the value of a property after development. The Ann Arbor DDA captures the taxes – just on that initial increment – of some other taxing authorities in the district. Those are the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. For FY 2013, the DDA will capture roughly $3.9 million in taxes.

The proposed ordinance revision would clarify existing ordinance language, which includes a paragraph that appears to limit the amount of TIF that can be captured. The limit is defined relative to the projections for the valuation of the increment in the TIF plan, which is a foundational document for the DDA.

If the actual rate of growth outpaces that anticipated in the TIF plan, then at least half the excess amount is supposed to be redistributed to the other taxing authorities in the DDA district.

City of Ann Arbor financial staff chart showing Ann Arbor DDA TIF revenue under various methods of calculation.

What the proposed ordinance revisions clarify is which estimates in the TIF plan are the standard of comparison – the “realistic” projections, not the “optimistic” or “pessimistic” estimates. However, the ordinance revisions as currently formulated do not clarify whether a “cumulative” method of performing the calculations should be used or if a year-to-year method should be used. It’s anticipated that an amendment to the ordinance revisions will be made that clarifies in favor of the “cumulative” method, which would have a negative financial impact on the DDA.

Use of the cumulative method has an impact on whether the redistribution of excess TIF is made on a one-time or recurring basis. Under the cumulative method, other taxing authorities in the Ann Arbor DDA TIF district would see a total on the order of $1 million in additional tax revenue, compared to the way the DDA currently calculates the TIF capture. The city of Ann Arbor’s annual share would be more than half of that amount, around $600,000.

Method: Year-to-Year                   
Refunds                                                         
       City       County      WCC       AADL      Total Ref    DDA TIF
FY14   $429,409   $149,392    $94,257   $40,163   $713,221     $3,964,457
FY15    $11,958     $4,160     $2,625    $1,118    $19,862     $4,774,758

===============================

Method: Cumulative                     
Refunds                                                      
       City       County     WCC        AADL      Total Ref    DDA TIF
FY14   $613,919   $213,583   $134,757   $57,421   $1,019,680   $3,657,998
FY15   $635,108   $211,673   $139,195   $58,539   $1,044,515   $3,773,043

-

The clarification of the ordinance crucially strikes two paragraphs related to bond and debt payments. One of the two paragraphs was key to the DDA’s current legal position – which is that no redistribution of TIF is required under the ordinance, given the DDA’s financial position. The DDA interprets the stricken paragraphs to mean that no redistribution to other taxing authorities needs to be made, until the total amount of the DDA’s debt payments falls below the amount of its TIF capture. In the FY 2014 budget, adopted by the DDA board at its Feb. 6, 2013 meeting, about $6.5 million is slated for bond payments and interest.

That clearly exceeds the amount of anticipated TIF capture in the FY 2014 budget – about $3.9 million. The DDA is able to make those debt payments because about half of that $6.5 million is covered by revenues from the public parking system. The DDA administers the public parking system under contract with the city of Ann Arbor.

This issue first arose back in the spring of 2011. The context was the year-long hard negotiations between the DDA and the city over terms of a new contract under which the DDA would manage the city’s parking system. The Chapter 7 issue emerged just as the DDA board was set to vote on the parking system contract at its May 2, 2011 meeting.

When the issue was identified by the city’s financial staff, the DDA board postponed voting on the new contract. The period of the postponement was used to analyze whether the DDA’s Chapter 7 obligations could be met – at the same time the DDA was ratifying a new parking system contract, which required the DDA to pay the city of Ann Arbor 17.5% of gross parking revenues.

Initially, the DDA agreed that money was owed to other taxing authorities, not just for that year, but for previous years as well. And the DDA paid a combined roughly $473,000 to the Ann Arbor District Library, Washtenaw Community College and Washtenaw County in 2011. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess.

Subsequently, the DDA reversed its legal position, and contended that no money should have been returned at all. That decision came at a July 27, 2011 DDA board meeting.

The following spring, during the May 21, 2012 budget deliberations, city councilmember Stephen Kunselman (Ward 3) proposed an amendment to the city’s FY 2013 budget that stipulated specific interpretations of Chapter 7, with a recurring positive impact to the city of Ann Arbor’s general fund of about $200,000 a year. Kunselman wanted to use that general fund money to pay for additional firefighters. That year, the budget amendment got support from just two other councilmembers: Jane Lumm (Ward 2) and Mike Anglin (Ward 5).

Kunselman also is putting forward the currently proposed changes to the ordinance. For a Chronicle op-ed on this topic, see: “Column: Let’s Get DDA TIF Capture Right.”

DDA Ordinance Changes: Board Reaction

Members of the board took turns near the beginning of the meeting, after public commentary and reports from other boards and commissions, and responded to the proposed changes. In largest part, they reacted to the changes as a political attack.

Keith Orr led off the comments by indicating he’d paraphrase a city councilmember [Stephen Kunselman], saying he wasn’t going to “vilify the city council.” Instead, Orr said, he wanted to express his concern about the “shot across the bow” that he’d witnessed at the March 4 city council meeting. That shot might be politically motivated, he ventured, in the same sense of the “ideologue-driven politics” that has ground the federal government to a stop. Or the council’s consideration might be related to a lack of understanding of the nature of the DDA.

Orr allowed that the relationship between the city council and the DDA board is occasionally strained, but he attributed this to the different nature of the entities and the culture of the organizations. On the whole, the relationship between the DDA board and the city council has been mutually beneficial, he said. [The choice of the phrase "mutually beneficial" was almost certainly not accidental, as it was the label given to the committees appointed by the respective bodies in 2010-2011 to negotiate the new contract under which the DDA manages the public parking system.] More importantly, the relationship was beneficial to the downtown and to the residents of Ann Arbor, Orr said.

From left: DDA board members Joan Lowenstein, mayor John Hieftje, and Nader Nassif.

“First I want to say how proud I am to be a part of the Ann Arbor Downtown Development Authority, serving as a volunteer on this board,” Orr stated. He noted that he’s been a downtown businessman for over 20 years and a resident of the city since 1976. [Orr is co-owner of the \aut\ BAR and Common Language Bookstore.] His pride is based on the fact that the DDA is doing something that very few other government entities are doing – focusing on infrastructure. We hear about crumbling infrastructure across the nation, Orr noted, but very few entities are doing anything about it. The reason for that, he contended, is that an elected body is mainly concerned with reelection. If the elected body owns an asset, then the elected body will take everything possible out of the asset and spend as little money as possible on the upkeep of that asset.

That’s the reason the DDA is the de facto parking authority, he contended. The city council had historically abdicated its responsibility to maintain the parking system that they owned and operated many years ago. The city still owns the parking system, he allowed, but now it is maintained and operated in a manner that would be the envy of most cities. He then quoted “his friend Howard Dean.” [Orr worked on Dean's Democratic presidential campaign and met him more than once.] Orr, quoting Dean: “The problem with our government is that we keep trying to come up with two-year solutions to problems which have five- and ten-year solutions. In the case of prisons they are 20-year solutions. In the case of the environment they are hundred-year solutions.”

The DDA’s spending of public money has benefited the city, Orr said. He noted that the DDA pays around $500,000 of the city’s bond on the new Justice Center building. And he contended that the DDA would do so for the rest of his lifetime. [The DDA authorized an $8 million grant in May 2008, to be paid in installments of roughly $500,000 per year – or 16 years of payments. Orr is possibly underestimating his longevity.] And that was to benefit the city of Ann Arbor, he said.

The city council needed to replace courtrooms and police headquarters, and the DDA helped the city do that, Orr said. Ann Arbor sidewalk curbs were not ADA-compliant, he continued, and compliance with that federal law costs millions of dollars. When the DDA undertook those curb ramp improvements in the downtown area, it saved the city’s general fund from having to pay for it, he contended. The DDA’s actions had improved the parking infrastructure, public and alternative transportation infrastructure, energy efficiency of downtown buildings, residential infrastructure – and so much more, Orr stated.

Orr then responded to criticism of the DDA’s handling of the Connecting William Street planning project – which entailed looking at the future use of five city-owned parcels in the downtown area. Orr noted that the city council had asked the Ann Arbor DDA to examine and propose a plan for the development of several parcels of land on or near William Street – called the Connecting William Street planning project. The DDA’s job was not to create its own ideas, he said, but rather to consult experts and engage the public. The DDA had proceeded in a variety ways – including symposiums on urban planning and development, and a “vigorous” series of community meetings. “If you accuse the resulting ideas of being stale, you are accusing the citizens of Ann Arbor of having stale ideas, not the DDA,” he said. The DDA had truly engaged the public by going out to the public, he said, not expecting them to come to the DDA.

Orr said he was proud to serve on a body that was collaborating with itself and with the residents and businesses in Ann Arbor. He felt that many members of the city council appreciate the odd but viable relationship between the DDA and the city council, concluding with: “I hope that calmer heads prevail.”

Bob Guenzel followed Orr by saying that he did not think he could be as eloquent as Orr, and characterized himself as a fairly new member of the DDA board. [Guenzel was appointed on Aug. 16, 2010.] Guenzel wanted to say how impressed he was by the success of the DDA. He didn’t take any credit for that, as a relatively new member, because what he’d observed is a very strong commitment to fiscal stability. “It’s now proposed that we change the rules about that, about how we can capture the TIF and the like,” Guenzel said, indicating he’d heard no reason for doing that. The DDA has a 10-year fiscal plan, he said, and he contended that the DDA manages the dollars very well. Guenzel maintained that he can see evidence of the good management through the success and the commitment to the downtown, the commitment to housing, the commitment to infrastructure, and through a very viable parking system – which helps support the city and is also very customer friendly.

Guenzel characterized the DDA’s relationship with the city as a “real partnership.” The DDA has had a very successful run, he continued, and he didn’t see a reason to change how the TIF capture is calculated. “Frankly, we are on the hook for some bond payments. Whether they are ours or the city’s, we’ve committed to those. And in my mind that should always be paid first.” He stated that he disagreed with the need for the changes, saying that he didn’t understand the reason.

Guenzel continued by saying that he was especially concerned about the proposed changes to the board composition. The idea that the DDA board could not have elected officials from other jurisdictions, he felt, would unfairly limit participation in board service. To have term limits, he felt, is a mistake. What the DDA gets in its board is a nice mix of new people – and also people who have a longer-term commitment, who were there at the beginning of some of the DDA’s projects. Whenever you put limits on who can serve and how long they can serve, that’s a mistake, Guenzel said. He felt that it’s up to the governing body to determine how long any of the DDA board members should serve – whether it’s one term or two or three, or even more. If you look around the room, he continued, some of the biggest contributions have come from board members who have served for several years.

The DDA can continue to improve how it does its work, Guenzel allowed, but he didn’t agree with changing the rules – to his mind, without any reason stated. Guenzel hoped the city council would reject the proposed changes. He encouraged the city council instead to come to the DDA board and identify problems they saw. He allowed that the board had received the courtesy of the city communicating the proposed changes. Guenzel concluded by coming back to how impressed he had been by the effort of the volunteer DDA board. He said he felt that Ann Arbor has the best downtown in Michigan – and he felt that the DDA deserves a lot of credit for that.

Board member Russ Collins, executive director of the Michigan Theater, picked up on the theme of volunteerism that both Orr and Guenzel had mentioned. He then went on to characterize the volunteer board’s work as not very exciting. When you’re dealing with prudent financial management, he said, and when you’re dealing with infrastructure issues, it seems to be “necessarily boring.” Construction is always difficult, Collins said. But to oversee a project like the DDA had with the new Library Lane underground parking structure – and to have that very good result, all things considered – is quite amazing, he concluded. Collins attributed the good results the DDA has achieved to solid management, the annual operating of the system, and the quality of the maintenance. A core piece of what any city board needs to do is prudent management of resources, he said, and the volunteers on the DDA board had taken that idea very seriously.

Collins then shifted gears a bit: “Is everything perfect? I don’t think so. I get mad at parking meters. I get mad at ice and snow being where you might not want it to be. I get frustrated with some of the aspirational nature of what we might like to do with the DDA, but we can’t do.” But measured by whether good use of taxpayer dollars is made by volunteers who are committed to the city of Ann Arbor, who work and live in the downtown, and who care – that’s what you have on the DDA board, Collins concluded. To have the DDA become “a political punching bag” for the sake of political aspirations, Collins said, didn’t seem to be a good use of the volunteers who serve on the DDA board. The members of the DDA board serve because of their bottom-line concern for a place that they love and a place they want to commit time, Collins said.

DDA board member Sandi Smith.

Sandi Smith, a former city councilmember, began her remarks by saying said she had a couple of concerns. Over the last decade, the DDA has been able to invest about $3 million in affordable housing in and near the downtown. That’s something the DDA had pulled back on a little bit when it embarked on construction of the underground parking structure. [Smith was alluding to the fact that the DDA historically transferred money from the TIF fund to its housing fund.] Smith indicated that the transfer into the housing fund is something that’s very easily eliminated from the budget – but this year, the transfer is back in the DDA’s budget [in the amount of $100,000]. Smith raised the specter that the fund transfer from TIF to housing could again be eliminated “if there’s a significant hit,” to the DDA’s TIF revenue.

Downtown Ann Arbor has a lack of diversity in housing options, Smith said. More opportunities are needed for people who work downtown – for example, at Barracuda Networks – and who want to live downtown, she said. It’s important to her that there is a broad range of opportunity for people to live downtown.

Smith also expressed concerned by contending that the “attack” is not grounded in a way that reflects an understanding of how tax increment finance actual works. The investments the DDA makes in infrastructure “brings the whole downtown up,” she said. It brings more money to the general funds of the taxing authorities. So the increase in the value of downtown properties helps everybody, she said. [Smith was in part alluding to the following feature of the Ann Arbor DDA's TIF capture: Capture is made only on the initial increment – not on the market appreciation of a property subsequent to an improvement, and not on the appreciation on an unimproved property. Not all DDA TIF districts in the state of Michigan work that way.] The proposed changes would undermine a system that seems to be working pretty well right now, she said. She called the changes “cutting the neck off the golden goose.”

Nader Nassif echoed what Guenzel had said. In his short time serving on the board, Nassif said he’d seen there is a real commitment by the board to do what is right. [Nassif was appointed on Sept. 6, 2011.] And there’s a real commitment to keep going forward with what is best for the city. He pointed out that he’s not an Ann Arbor native – noting that he was not born here, but had moved here. He’s lived here now for four or five years and he made himself move downtown. He said he would not live anywhere else in the state of Michigan. He allowed that the board received its share of criticism, but the board took that criticism and continued to move forward. He noted also that it was a volunteer position, and he also didn’t see a need for a change.

From left: DDA executive director Susan Pollay and board chair Leah Gunn before the March 6 meeting started.

Leah Gunn, who serves as chair of the board, wrapped up the board’s reaction to the proposed changes, saying that she agreed with her colleagues – that “we really ought not to mess with” something that works really well. She said that the DDA had been very good stewards of the city’s infrastructure. When she first joined the board – saying she was the one who had been here the longest and there’s been criticism about that – the city’s parking structures were in a state of poor repair. [Gunn was first appointed on Aug. 19, 1991.] When the DDA took over management of the parking system, the DDA had proceeded with a plan of repair and replacement of the city-owned parking structures – paid for by the parking system because the DDA was managing it in a far more efficient manner, she said. The DDA had torn down and built two new parking structures and done major repair on all the others, she said. The parking system is now customer friendly, she added, and safe. Because the city’s parking structures were in such poor condition, all of the money that had been spent during the first phase, she said, had not caused any new parking spaces to be added to the system. But finally, with the construction of the Library Lane underground garage, 711 spaces had been added. Her feeling is that the DDA has been careful and prudent, and that the DDA has been beneficial to the city.

DDA Ordinance Changes: Public Comment

Odile Hugonot Haber addressed the board at the conclusion of the meeting during public commentary, rebuking the board members for their remarks about the DDA’s successes. She criticized them for celebrating and making superfluous comments, rather than looking seriously at the reasons people criticize them. She told them she was grateful for the DDA’s support of affordable housing. But she disagreed with their vision for the city, which she characterized as growing buildings instead of beauty.

Colliers International Update

Brendan Cavendar from Colliers International appeared before the board during the time allotted for public commentary at the start of the meeting. He indicated that he’d been asked to appear at the board meeting in order to answer any questions board members might have about what’s going on with real estate in downtown Ann Arbor right now. He offered to comment from his perspective, as someone who’s involved in a lot of leases and sales.

Mayor John Hieftje, who also sits on the DDA board, asked Cavendar to describe what’s going on at the former Borders location on East Liberty and Maynard. Cavendar noted that Colliers had announced one of the tenants, which represents about 30-40% of the overall building: PRIME Research. The company is relocating from Ashley Street, he said. PRIME Research is hiring “a ton of people,” Cavendar reported, so they’re transitioning from about 5,000 square feet to 70,000 square feet. What’s significant about that move, he continued, is that it mimics some of the other changes in that area – comparing it to other tech company moves.

Last year, Barracuda Networks had moved into the same area, he noted. And Menlo Innovations had also moved into the area. The area of Liberty, Maynard and Washington has really become a “tech hub,” Cavendar said. He noted that tech companies are very high-density tenants – not four employees per 1,000 square feet, but rather six or seven employees per 1,000 square feet. Their employees are also very well-paid, he continued. They all go out to eat, they all drink, they all shop – and the restaurants are filling up, he said. So there’s been a real transition and movement toward downtown Ann Arbor by tech companies, he concluded.

Hieftje interjected that this was something the city had started several years ago when Google had chosen to establish a location in Ann Arbor. Hieftje indicated he felt that the “tech campus” had worked out pretty well. “Absolutely,” Cavendar agreed. Cavendar felt that in the next 2-3 years, the block of Liberty, Maynard and Washington would have around 1,400 young tech employees. As Cavendar was set to name the factor that really helped get those companies to move down there, and the only reason Barracuda Networks was able to move to downtown Ann Arbor, Russ Collins playfully interjected: “The Michigan Theater!” [Collins is executive director of the theater, located on East Liberty.]

Collins’ remark drew laughs, but Cavendar reported that the key ingredient was, in fact, parking. He said that Barracuda been a day away from signing a lease at a different location in south Ann Arbor. It’s great to think that everybody can ride a bike or take the bus, he allowed, but not everyone can. Hieftje ventured that the new Library Lane underground structure was the key. “Absolutely,” Cavendar agreed. Parking was also an incentive for PRIME Research to move to the downtown area, Cavendar said. PRIME Research will eventually have 150-250 employees, he said, and Barracuda Networks is looking to grow to about 450 people or more. That helps the whole area, he said.

Leah Gunn asked Cavendar to comment on limitations. Is there an amount of square footage that doesn’t exist, but that is a need? Cavendar said Colliers is looking at that question. Right now, they estimate that in the downtown area – the DDA district and nearby – there’s about 150,000 square feet of office space. There are only a few large floor plates greater than 10,000 square feet. But right now, he said, not that many companies are looking for those large floor plates. That’s what Colliers has been seeing, in any case, Cavendar reported.

In the last three years, Colliers has seen the leasing rates start to drift upward – to $24, $25, and $26 per square foot. Gunn ventured that’s more than the rates were fairly recently. And Cavendar allowed that the rates had been down to around $18, $19, and $20 a square foot. Eventually the leasing rates could get to the point where it might be feasible to build new construction of office space. But he felt that leasing rates would need to get to $29 or $30 a square foot before new construction would be justified. Roger Hewitt asked roughly what percent of available space is vacant. Cavendar estimated it at around 9%.

Cavendar then returned to the topic of the former Borders location. On the first floor, he reported, there are more offers than there is space available. He characterized it as a jigsaw puzzle – trying to find the best mix of local and national, retail and restaurants. Restaurants, he said, are doing better than they ever have. Some downtown restaurants are reporting that they’re doing between $3.5 million and $6 million in sales. Even with the high rents, that works, Cavendar said. The restaurants are doing well, and they’re making money, and that means that they’re signing longer leases, he continued. They’re not signing three-, four-, or five-year leases, but rather 10- or 15-year leases. He felt that would reduce the turnover of tenants and would be fueled by the office tenancy.

Hieftje asked when Cavendar thought the old Borders location would be occupied, venturing that it could be next summer. Cavendar felt that depending on how long the build-out took, by the end of this year all the new tenants would be open for business.

John Mouat asked Cavendar to estimate how much of the growth in tech companies was local, compared to being driven by other factors. Cavendar attributed much of the growth to the availability of recent graduates of the University of Michigan. Employers don’t have to fight for employees like they would on the West Coast, he said, and Ann Arbor has a great community. Companies want to be close to the university because they use students as interns, and the day those interns graduate, they are hired full-time, Cavendar reported. Mouat clarified that he actually wanted to know how much the population of people downtown is growing due to people who are already in the area, compared to people coming from outside. Cavendar felt that it’s a mix, but the majority of new employees are from Ann Arbor. It’s the students who are currently in school or workers who are employed by other companies in the area who are taking the downtown jobs.

Hieftje asked Cavendar to address the topic of the possibility of a grocery store downtown. Cavendar said he’d talked to one larger unnamed company that gave as a rule of thumb that a downtown grocery would need about 10,000 full-time residents downtown. And currently Ann Arbor has around 4,000-5,000 downtown residents – about half of what’s required even to consider locating downtown. Also, parking would need to be provided onsite, Cavendar stressed. Parking in a public parking structure and paying for that in addition to groceries would just not be an option, Cavendar said – stressing that this wasn’t his personal opinion, but rather feedback straight from the unnamed company.

Hieftje asked Cavendar to characterize generally how the downtown is doing. Cavendar responded with “improving strongly.” He noted that there’s been big transition in the Liberty/State area, but there is virtually no office space left in that area, he said.

Summing up, Cavendar felt that they’d continue to see vacant spaces fill up and see their rates improve. The rates had already improved over the last 2-3 years, he said, and retail is as healthy as ever. He noted that Colliers tracks other cities in Michigan, and there is no other city that’s doing as well as Ann Arbor. He joked that he was not just saying that because he was born here and was educated here. The rental rates in Ann Arbor are some of the strongest in the entire state of Michigan, he said. We should be grateful for that, he concluded.

Republic Parking Management Incentive

The history of the parking system factored into board remarks on proposed ordinance changes, and was mentioned by Brendan Cavendar of Colliers International, as a reason that Barracuda Networks was able to locate downtown. The parking system’s monthly usage report is also a regular feature the board’s monthly meetings.

But at the March 6, 2013 meeting, the board had an voting item on its agenda directly affecting the parking system. The board was asked to award the full $50,000 amount of a discretionary management incentive to Republic Parking – the DDA’s contractor for day-to-day operations. Republic Parking’s contract with the Ann Arbor DDA covers actual costs, but also includes a $200,000 management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis.

For the first time in the last five years, the DDA board was considering a recommendation to award the full $50,000 of the incentive. Last year, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.

The direct costs for Republic Parking budgeted for FY 2013 – the current fiscal year ending June 30 – are $6,298,423 out of about $18.1 million in budgeted gross revenue for the parking system.

Part of the difference this year leading to the recommendation to award the full $50,000 was improvement in bi-monthly customer surveys over the year – as 72% of customers rated the parking system as at least 4 on a 5-point scale. That compared with 63% of parking patrons who rated the parking system at least a 4 last year.

The DDA’s independent inspector for the parking system completed 48 written reports in the course of the year that evaluated cleanliness of structures and lots. Those ratings averaged 91.71% – an increase over last year’s score of 90.48%. Also counting in Republic’s favor was the fact that the Dec. 31, 2012 accounts receivable balance for parking permit accounts was $7,898.26, which is 1.5% of the amount that is billed on an average monthly basis. The DDA’s target for that figure is 5%.

Dead tickets averaged 1.01% for the year, a decrease from last year’s 2.54%. That came in under the DDA’s target of 1.75%.

At the DDA’s operations committee meeting on March 1, 2013, Republic’s operations manager Art Low asked that other management staff be called out for praise by name – including Stephen Smith, Michael Bandy, Edward Wheeler and Judy Comstock.

A staff memo accompanying the resolution to award the $50,000 incentive cited other factors, besides improvement in the metrics used to evaluate the amount of the management incentive. The memo highlighted Republic’s performance in connection with the opening of the new 711-space Library Lane underground parking garage and the installation of automated payment equipment.

The Ann Arbor DDA manages the city’s public parking system under contract with the city of Ann Arbor. The contract calls for 17% of gross parking revenues to be paid to the city of Ann Arbor.

Republic Parking Management Incentive: Board Deliberations

Roger Hewitt reviewed the terms of the DDA’s contract with Republic Parking and how the management fee is structured – with a $50,000 component that’s discretionary.

He said that for the first time since he’s served on the board, the full amount of the incentive was being recommended by the staff and the operations committee. That recommendation had Hewitt’s enthusiastic support. He characterized the metrics used to evaluate Republic as including objective as well subjective criteria. Hewitt reviewed the criteria in the staff memo. In describing Republic’s efforts in opening the new parking structure and installing automated ticketing equipment in other structures, he said that Republic had taken on more responsibilities in the last year than in any year he’s been on the board. He wholeheartedly endorsed the recommendation of the full amount of the discretionary part of the management fee.

Russ Collins quipped that because Hewitt is generally a curmudgeon, Collins saw Hewitt’s remarks as a huge compliment.

Board chair Leah Gunn related that in her personal experience parking in the system, Republic Parking employees are “right there on the ball.” She gave great praise to Republic Parking and their employees on the front lines.

Outcome: The board voted unanimously to approve the award of the $50,000 discretionary component of Republic Parking’s management fee.

Monthly Parking Report

Roger Hewitt delivered the monthly parking usage report, covering the month of January. He noted that the reports start to include some narrative providing a little rationale for the month-to-month fluctuations to help understand what’s different.

University of Michigan classes didn’t start until Jan. 9 this year, compared to last year’s Jan. 4 start.  That effectively reduced the number of business days this year by three, a negative influence, according to commentary in the report. New Year’s Day fell on Tuesday this year instead of Sunday last year. That also had a negative impact.

Hewitt indicated that the report was intended to include not just additional narrative information, but also additional numerical data. [In this context, a preliminary report based on percentage of hours sold had been generated as far back as the summer of 2011.]

Hewitt characterized the report as indicating that there’s still clearly solid demand for parking in the system.

Chart by chart, here’s how the system looked [Chronicle charts based on DDA data]:

Ann Arbor Public Parking System: Hourly Patrons. The number of hourly patrons has not shown as much growth as revenue.

Ann Arbor Public Parking System Revenue. Revenue continues to increase, due at least in part to an increase in total inventory of spaces as well as increases in rates.

Ann Arbor Public Parking System: Revenue per Space – Focus on Structures.

Ann Arbor Public Parking System Revenue Per Space – Focus on Surface Lots.

Ann Arbor Public Parking System Revenue per Space: Total System.

go!pass Funding for Downtown Employees

The board considered a resolution to approve a $610,662 grant to support the getDowntown program and the go!pass, which it provides to employees of participating downtown companies.

go!pass Funding for Downtown Employees: Background

Holders of a go!pass do not themselves pay a fare to board the bus. Rides are subsidized by the DDA and to a much lesser extent by employers.

The total grant to the getDowntown program breaks out as follows:

YEAR                    2014
getDowntown          $40,488    
go!pass             $479,000   
NightRide 
go!pass discount     $18,233     
Route 4 
East of US-23        $56,363   
Route 5 
East of US-23        $16,578   
============================
Total               $610,662

-

Compared to a request made at the previous month’s board meeting, on Feb. 6, 2013, a revised request made at the operations committee meeting on March 1, 2013 increased the line item for the getDowntown program by $5,000 – for marketing, outreach and operations. That increase was from $35,488 to $40,488. At that operations committee meeting, members resisted the $18,000 that had been requested to support the AATA’s Express Ride service from Chelsea and Canton, and did not include it in the recommendation to the board.

The go!pass program requires a participating downtown employer to purchase a go!pass for all employees in the company – at a cost of $10 a year per employee. That translated to a peak of 7,226 go!passes in circulation for FY 2011. That number dropped to 6,591 in FY 2012 – or $65,910 to offset the cost of rides taken with the go!pass. The current requested funding was based on projections of the estimated number of rides taken. Last year around 601,000 rides were taken using the go!pass by around 4,130 employees. The combination of go!pass funding is meant to work out to $0.90 per ride.

Administratively, the getDowntown program is part of the Ann Arbor Transportation Authority.

Through the AATA’s fiscal year 2012, which concluded at the end of September 2012, here’s how go!pass ridership has trended:

go!pass total rides by year. The number of rides taken with go!passes has roughly doubled since 2004. This past year reflected a dip, which appears to be related to a reduced number of cards in circulation: 6,591 compared to 7,226. (Data from AATA; chart by The Chronicle.)

go!pass rides by month, year over year. The red trend line is the most recent year, 2012. The previous year is shown in black. (Data from AATA; chart by The Chronicle.)

While the total number of rides dipped slightly, the number of rides per card continued its upward trend. Since 2004, the number of rides per card has increased from about 60 to about 90. (Data from getDowntown program; chart by The Chronicle.)

Full adult fare for AATA regular bus service is $1.50. According to the most recent AATA treasurer’s report, current operating costs for the AATA regular bus service work out to about $3.18 per rider. On average, a rider pays 22.1% of that cost and the local transit tax covers 34.6%. The remainder is covered with state and federal operating assistance.

go!pass Funding for Downtown Employees: Board Deliberations

John Mouat introduced the resolution. He noted that getDowntown executive director Nancy Shore was in the audience and was available to answer questions. Mouat reviewed how the proposal had been discussed at the last couple of operations committee meetings. The AATA’s CEO, Michael Ford, had attended the operations committee meeting and the previous board meeting to discuss the proposal.

Mouat walked through the breakout of the funding request, including the portions for NightRide and Routes #4/#5.  The operations committee supported enhancing the connection to Ypsilanti, Mouat said, but had “qualms” about a request to support express commuter service from Canton and Chelsea to Ann Arbor. The committee’s discussion at its March 1 meeting had included discomfort with the fact that the funding would benefit only 15 riders. Mouat also cited some caution as the DDA’s financial picture possibly changes – an allusion to consideration that the city council is giving to clarifying TIF capture calculations. The subsidy of the express commuter service from Canton and Chelsea was a category where the committee felt the DDA could withhold the requested $18,000.

DDA board member John Mouat.

Russ Collins noted that there are some people whose business is located outside downtown, but perhaps still near downtown, who conduct business downtown – like journalists or lawyers. He wondered about the possibility of making such businesses also eligible for the go!pass program. Shore explained that the getDowntown program has a policy under which workers who are temporarily contracting for a company that’s located downtown can purchase go!passes. She also pointed to institutions like the Workantile, whose members are eligible for go!passes. The key is that there must be some entity downtown that anchors the go!passes.

Collins wondered if exceptions were ever made. Shore responded by saying that the go!pass program is as much the DDA’s program as it is the AATA’s, and that the possibility of exceptions could be considered. Sandi Smith mentioned that one of the proposed changes to the DDA ordinance involved the use of funds outside the DDA’s TIF district. Nader Nassif gave his perspective as an attorney, who didn’t imagine there were a lot of attorneys with offices just outside downtown who’d likely be interested in being eligible.

Mayor John Hieftje said he was always very happy to support the go!pass funding, saying it was one of the best things being done by any organization. It helps those who can’t afford transportation, and reduces congestion and pollution. Board members also offered praise for Shore’s performance.

Outcome: The board unanimously approved the $610,662 funding request for go!passes.

At the conclusion of the meeting, during the time available for public commentary, Shore was effusive in her appreciation for the allocation of the grant. Brendan Cavendar of Colliers International also took a brief turn at the public commentary podium at the end of the meeting to add to his remarks made at the start of the meeting. He cited the go!pass as crucial to the decision of PRIME Research to locate downtown.

Communications, Committee Reports

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

Comm/Comm: Connector Study

Roger Hewitt gave the board an update on the connector study.

By way of background, the corridor being studied runs from US-23 and Plymouth southward along Plymouth to State Street and farther south to I-94. The Ann Arbor city council approved its share of the local funding match for the $1.5 million study at its Oct. 15, 2012 meeting, which followed a commitment of DDA support. The current study is an alternatives analysis phase, which will result in identifying a preferred mode (e.g., bus rapid transit, light rail, etc.) and the location of stations and stops. A feasibility study for the corridor costing $640,000 has already been completed. That initial study concluded that some type of improved high-capacity transit system would be feasible – which could take the form of bus rapid transit, light rail transit, or elevated automated guideway transit.

Here’s the breakdown of the $300,000 in local funding sources for the $1.5 million study: $150,000 from the University of Michigan; $90,000 from the Ann Arbor Transportation Authority; $30,000 from the Ann Arbor DDA; and $30,000 from the city of Ann Arbor. The $300,000 satisfies a 20% matching requirement for a $1.2 million federal grant the AATA has received to complete the $1.5 million project.

At the DDA board’s March 6 meeting, Hewitt indicated that possible routes for the connector are now being considered. He characterized it as a high-capacity transit line that would run in a rough boomerang from northeast Ann Arbor through UM’s north campus medical center, and central campus, the continue downtown and south to the Briarwood Mall area. Hewitt noted that the alternatives analysis phase is necessary to qualify for federal matching funds for eventual construction of such a project.

Coming up with potential alternative routes is a challenging task, Hewitt said, because there are no obvious ways to get through some of the tighter areas of the city. But as soon as some possible alternatives are actually put together, he continued, the study group will conduct some public outreach to get feedback that would lead to the end result of the study: the locally-preferred alternative. Those outreach efforts would probably be taking place at the end of April or the beginning of May, he said.

The initial study data collected by URS Corporation – the consultant hired to do the alternatives analysis study – showed, as expected, that the medical center and the central campus area had a high “density of trips.” But Main Street in downtown area has as great a density of trips as the campus area, Hewitt reported. It’s encouraging to see that the activity level is not centered only at the University Michigan, he said.

One of the questions that had been raised, Hewitt allowed, is whether Ann Arbor is large enough for this kind of high-capacity corridor. The consultant was asked to look at comparable cities that have high-capacity transit in some form. The list of cities included: Cleveland, Eugene, Little Rock, New Orleans, Norfolk, Portland, Salt Lake City, Tacoma and Jacksonville. Lansing, Grand Rapids and Fort Collins were also included – because they have systems in the planning stages right now.

With the possible exception of Lansing, he said, all of the cities are population-wise larger, or even quite a bit larger than Ann Arbor. But if you look a little deeper, he said, at the population per square mile – the population density – Ann Arbor ranks fourth on the list. And if you look at employment density – how many people are employed per square mile – Ann Arbor is first on the list. There are 3,800 people per square mile employed in the city of Ann Arbor, Hewitt reported. The next-closest city on the list is Cleveland at about 3,300. Then it drops down to about 2,500 and lower.

So although Ann Arbor is small geographically, it’s pretty dense in population, and very dense in jobs. That’s the answer to why you need a transportation connector like this, Hewitt concluded. He ventured that moving people around and finding places for people to park is going to become increasingly difficult.

Comm/Comm: Connecting William Street

In reporting out from the downtown citizens advisory council (CAC), Ray Detter said the CAC continues to support the DDA’s leadership of the careful planning of the downtown – in the form of the Connecting William Street (CWS) planning project. That’s a planning effort the DDA undertook as the result of an April 2011 city council directive to consider alternative uses for five city-owned parcels in the downtown William Street corridor.

The CWS project was also mentioned at the board meeting during Joan Lowenstein’s report from the board’s partnerships committee. She described how the city’s planning commission, on its own initiative, had accepted the CWS project as a supporting resource document to the city’s master plan. [That action came the previous evening, on March 5, 2013.]

Sandi Smith asked how the CWS plan might factor in a city council action taken the day before the planning commission’s meeting, on March 4, 2013. At that meeting, the council had voted to direct the city administrator to issue an RFP (request for proposals) for brokerage services to sell the former Y lot at Fifth and William. The lot is currently used as a surface parking lot in the city’s public parking system, and is one of the five lots in the CWS plan.

Mayor John Hieftje, who had co-sponsored the council’s resolution with Stephen Kunselman (Ward 3), told Smith there’d been some discussion about the resolution, stressing that no final decision had been made. Hieftje allowed that the CWS recommendation from the DDA had been to consider packaging the old Y lot together with the top of the Library Lane underground parking garage. But he felt that the Y lot was a special case, because of the interest-only payments the city was making on a 10-year-old $3.5 million loan. Responding to a query from Smith, Hieftje indicated it would still be possible to incorporate public opinion into the future of the old Y lot.

In his remarks reporting from the CAC, Detter provided implicit commentary on the council’s Y lot resolution by saying the CAC didn’t think that downtown city-owned property should be for sale to the highest bidder.

The fact that the city is, for now at least, not packaging the Y lot with the top of the Library Lane underground parking garage means there’s possibly even more additional time to explore temporary interim uses for the top of Library Lane. During public commentary at the conclusion of the meeting, Alan Haber spoke in support of an artificial ice-skating rink at that location. He indicated that his group would be making a presentation on that topic at the next meeting of the DDA’s partnerships committee, on March 13 at 9 a.m.

Comm/Comm: Beat Cops

Roger Hewitt briefly addressed the possibility that the DDA might fund community policing in the form of contracting with the Ann Arbor police department for downtown police beat patrols. The board has money for the patrols in the FY 2014 budget, which it adopted at its Feb. 6, 2013 meeting. A lot more information is needed before pursuing that possibility, Hewitt indicated. And if the financial picture changes – an allusion to the possibility that the city council clarifies the DDA’s TIF capture in a way that negatively impacts the DDA – the downtown police patrols won’t go anywhere.

Comm/Comm: Aging Population

Joan Lowenstein reported from a day-long seminar that the AARP had sponsored on the University of Michigan campus – about aging communities and how municipalities can respond to aging communities. She noted that councilmember Sabra Briere, who represents Ward 1, was also in attendance at the seminar. [Briere also attended the March 6 DDA board meeting.] Ann Arbor leans more heavily than the national average toward the baby boomer age, Lowenstein noted, and leans less heavily toward those who are under 40 years old. It might be surprising – but it’s because Ann Arbor is not retaining young people, she said. At the seminar there were lots of national experts on urban planning, and walkability and services for older people. They said that if you focus on walkability, transit, and livability improvements, then that benefits the aging population and helps to retain the younger population. Lowenstein concluded that the DDA had been focusing on the right kind of infrastructure improvements.

Comm/Comm: Public Art

The city of Ann Arbor’s public art administrator, Aaron Seagraves, briefed the board on the Detroit Institute of Arts’ Inside|Out project, which involves installing framed reproductions from the DIA’s collection at outdoor locations on building facades or in parks. Two private Ann Arbor businesses – Zingerman’s Deli and the downtown Borders store – were part of the program in 2010, and since then the DIA has been talking periodically with AAPAC and city staff about expanded participation.

The works will be hung from late March through June at several downtown locations: the Justice Center (Fifth & Huron); downtown fire station (Fifth & Ann); Lena restaurant (Main & Liberty); Kerrytown Market & Shops (Fourth & Kingsley); Sculpture Plaza (Fourth & Catherine); Zingerman’s Deli (Detroit & Kingsley); and the Liberty Street alley near Main Street.

Comm/Comm: AirRide

During public commentary time, three Skyline High School students – who are part of the school’s communications, media, and public policy magnet program – addressed the board on the topic of the AATA’s AirRide service. By contracting with Michigan Flyer, the AATA provides hourly service between downtown Ann Arbor and Detroit Metro airport. The students’ remarks came in support of the service – and they ticked through the various environmental benefits, economic advantages, as well as the amenities offered on the buses, like free wifi. [The DDA's role in the AirRide is that it provides subsidized parking in the Fourth and William parking structure for those who use the AirRide service.]

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

Absent: Newcombe Clark.

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

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The DDA board voted to approve the grant at its March 6, 2013 meeting. The total grant to the getDowntown program breaks out as follows:

YEAR                    2014
getDowntown          $40,488    
go!pass             $479,000   
NightRide 
go!pass discount     $18,233     
Route 4 
East of US-23        $56,363   
Route 5 
East of US-23        $16,578   
============================
Total               $610,662

-

Compared to the request made at the previous month’s board meeting, on Feb. 6, 2013, a revised request made at the operations committee meeting on March 1, 2013 increased the line item for the getDowntown program by $5,000 – for marketing, outreach and operations. That increase was from $35,488 to $40,488. At that operations committee meeting, members resisted the $18,000 that had been requested to support the AATA’s Express Ride service from Chelsea and Canton, and did not include it in the recommendation to the board.

The go!pass program requires a participating downtown employer to purchase a go!pass for all employees in the company – at a cost of $10 a year per employee. That translated to a peak of 7,226 go!passes in circulation for FY 2011. That number dropped to 6,591 in FY 2012 – or $65,910 to offset the cost of rides taken with the go!pass. The requested funding is based on projections of the estimated number of rides taken. Last year around 601,000 rides were taken using the go!pass by around 4,130 employees. The combination of go!pass funding is meant to work out to $0.90 per ride.

Through the AATA’s fiscal year 2012, which concluded at the end of September 2012, here’s how go!pass ridership has trended:

go!pass total rides by year. The number of rides taken with go!passes has roughly doubled since 2004. This past year reflected a dip, which appears to be related to a reduced number of cards in circulation: 6,591 compared to 7,226. (Data from AATA; chart by The Chronicle.)

go!pass rides by month, year over year. The red trend line is the most recent year, 2012. The previous year is shown in black. (Data from AATA; chart by The Chronicle.)

While the total number of rides dipped slightly, the number of rides per card continued its upward trend. Since 2004, the number of rides per card has increased from about 60 to about 90. (Data from getDowntown program; chart by The Chronicle.)

Full adult fare for AATA regular bus service is $1.50. According to the most recent AATA treasurer’s report, current operating costs for the AATA regular bus service work out to about $3.18 per rider. On average, a rider pays 22.1% of that cost and the local transit tax covers 34.6%. The remainder is covered with state and federal operating assistance.

This brief was filed from the Ann Arbor DDA offices located at 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings. A more detailed report of the meeting will follow: [link]

City Apartments, a Village Green residential property under construction on Feb. 4, 2013. (View is at First & Washington looking east) The bottom two floors are a parking deck, which is on track to be turned over to the city and the DDA on March 15, 2013. It will expand the capacity of the public parking system by almost 100 spaces. (Photo by the writer.)

The surplus from FY 2014 would be used in the FY 2015 budget, which calls for $23.8 million in expenditures against $23.5 in revenues, leaving the DDA with about $5.2 million in total fund balance reserve at the end of FY 2015.

DDA revenues come from two main sources – tax increment finance (TIF) capture and Ann Arbor’s public parking system.

Besides operation and capital maintenance of the parking system, revenues to the public parking system are used by the DDA to support the getDowntown program’s go!pass subsidy. So one focus of the Jan. 25 DDA operations committee meeting was budgeting for that program. The go!pass is a bus pass that downtown employees obtain through their employers, who pay $10 annually for passes for each of their employees. In a presentation made to the operations committee, Michael Ford – CEO of the Ann Arbor Transportation Authority – requested a total of $623,662 to support the getDowntown program, including the go!pass subsidy. That compares with $553,488 granted by the DDA last year. For FY 2014, the DDA’s draft budget calls for a $600,000 allocation that could cover most of that request.

This year’s draft budget also calls for $250,000 in parking revenue to be spent on a possible arrangement with the city of Ann Arbor to pay for additional downtown police patrols. Based on the conversation at the operations committee meeting, it’s not a topic on which any recent detailed talks have taken place. But DDA executive director Susan Pollay indicated a strong interest in having those conversations with the city. If that didn’t lead to an agreement with the city, she said, then the DDA board was certainly not obligated to spend the money in that way.

Another $300,000 in the FY 2014 budget that could be used somewhat flexibly is in the TIF fund budget, labeled “capital construction.” It could be used to fund sidewalk improvements between William and Liberty along State Street to facilitate patio dining for restaurants along that strip – or streetscape improvements for William Street, or even alley improvements near the Bell Tower Hotel, Pollay told the committee.

The full DDA board will be asked to approve the FY 2014 and FY 215 budgets at its Feb. 6 meeting. The DDA’s fiscal year is in sync with the city of Ann Arbor’s fiscal year, which begins on July 1. The city council will settle the city’s FY 2014 budget by May 20 – the council’s second meeting in May. While the city uses a two-year planning cycle – which begins fresh this year – the council approves its budget just one year at a time. [.pdf of draft DDA budgets FY 2014-15] [.pdf of FY 2013 six-month financial statements] [.pdf of monthly parking reports]

Parking Fund Budgeting

The Ann Arbor DDA operates the public parking system under a contract with the city of Ann Arbor – an agreement that calls for the city to receive 17.5% of gross revenues to the system. For this year and the following two budget years, that 17% payment to the city is projected to translate to $3.14 million, $3.20 million and $3.24 million.

In the current year, total parking revenues are budgeted for $18.1 million. But according to the financial statements through December 2012, which is mid-way through the fiscal year, actual parking revenues through that period are $9.4 million, or about $300,000 more than the budgeted year-to-date number. Projected parking revenues for the next two fiscal years are $19.3 million and $19.6 million, respectively.

Parking fund revenues pay for the direct expense of contracting with Republic Parking for the day-to-day operations of the system (about $6.5 million), rental for some properties not owned by the city but used for public parking (about $0.5 million), as well as roughly half the DDA staff compensation and administration (about $370,000). The other major allocation from the parking fund is for maintenance of the parking structures. For FY 2014 there’s $4.4 million set aside for parking maintenance.

Parking Fund: Alternative Transportation

One focus of the Jan. 25 DDA operations committee meeting was budgeting for the getDowntown‘s go!pass program, which is also funded from parking revenues. Downtown employers can purchase a go!pass at a cost of $10 per employee – with the condition that the business must purchase a pass for all their employees. Beyond that, rides taken with the go!pass are free to the pass holder or their employer. The cost of the rides has been subsidized historically by the DDA, using revenues from the parking system. The getDowntown program is administratively a part of the AATA. Through the AATA’s fiscal year FY 2012, which concluded at the end of September 2012, here’s how go!pass ridership has trended:

go!pass total rides by year. The number of rides taken with go!passes has roughly doubled since 2004. This past year reflected a dip, which appears to be related to a reduced number of cards in circulation: 6,591 compared to 7,226. (Data from AATA; chart by The Chronicle.)

go!pass rides by month, year over year. The red trend line is the most recent year, 2012. The previous year is shown in black. (Data from AATA; chart by The Chronicle.)

While the total number of rides dipped slightly, the number of rides per card continued its upward trend. Since 2004, the number of rides per card has increased from about 60 to about 90. (Data from getDowntown program; chart by The Chronicle.)

In a presentation made to the operations committee on Jan. 25, AATA chief executive officer Michael Ford requested a total of $623,662 to support the getDowntown program, including the go!pass subsidy. That compares with $553,488 granted by the DDA last year. In the DDA’s budget summary for FY 2014, the getDowntown subsidy falls under the line item for “alternative transportation” – for which $615,000 is allocated this year.

The detailed breakout for the parking fund, which the DDA uses to support getDowntown – indicates that $15,000 of the $615,000 is allocated for the “connector study.” That’s a study meant to determine a locally-preferred alternative mode for a high-capacity transit system along the corridor that arcs from US-23 and Plymouth southward along Plymouth to State Street and farther south to I-94. In the fall of 2012, the DDA approved that $15,000 as part of a total $30,000 commitment over two years. Other funding partners for the $1.5 million project – which is supported by a $1.2 million federal grant – include the city of Ann Arbor, the AATA and the University of Michigan.

Compared to the DDA’s $600,000 budgeted amount, Ford’s request is $23,662 more. As one way to cover that difference, DDA executive director Susan Pollay pointed committee members to $300,000 of discretionary grant funding from the parking fund that’s in the draft FY 2014 budget. Of that amount, $50,000 could be used to cover the gap between the budgeted amount and Ford’s request.

By way of additional background, in the past the AATA has essentially agreed to absorb the cost of go!pass rides that might be taken in excess of the funded amount. So, at the AATA board’s Aug 24, 2011 meeting, a decision was made to accommodate the DDA’s financial circumstances and to set the amount charged for go!passes in 2013 at the amount the DDA had already allocated – $475,571.

At the Jan. 25 DDA operations committee meeting, getDowntown director Nancy Shore put the cost-per-ride figure used to calculate the request at about $0.90 per ride. In negotiating the cost-per-ride for similar arrangements – like the University of Michigan MRide program – AATA uses as a benchmark the amount that bus riders would pay if they paid the full fare under a regular 30-day pass. The 30-day pass is the cheapest full-fare option. Full adult cash fare on boarding would be $1.50.

At the AATA board’s most recent meeting, on Jan. 17, 2013, the relationship between rides taken and fares collected was highlighted. The treasurer’s report included a note that despite greater ridership numbers, the fares collected were not keeping pace. One theory floated was that this disparity could be attributed to go!pass ridership in excess of the projected funding need.

The request from AATA this year is based on the projected ridership. In the chart below, presented by Ford at the Jan. 25 meeting, the decreased request in the first line, for getDowntown program operations, is explained by the fact that this year the program will not incur the cost of an evaluation survey. The projections based on ridership originating east of US-23 are made possible by the swipe-able go!pass cards and fare-box technology, which allow the AATA to analyze where riders are boarding the bus.

YEAR                 2013       2014
getDowntown       $52,488    $35,488   
go!pass          $475,000   $479,000   
NightRide 
go!pass discount   $5,000    $18,233   
ExpressRide 
go!pass Discount   $7,000    $18,000   
Route 4 
East of US-23     $14,000    $56,363   
Route 5 
East of US-23          $0    $16,578   
====================================
Total            $553,488   $623,662

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The $14,000 provided last year to help subsidize improved service to and from Ypsilanti on Route #4 was actually authorized by the DDA board on Dec. 1, 2010, as a “challenge grant” – which was made hoping to prod other entities to join in supporting the increased service.

And committee members on Jan. 25 wanted to know what kind of requests were being made by the AATA municipalities and entities other than the DDA. Ford responded by indicating that other communities that are a part of the “urban core” will also be asked to help fund the Route 4 improvements as part of conversations that have continued since the abandonment of the Act 196 countywide authority, which was newly incorporated in the fall of 2012.

By way of background, part of the Ann Arbor city council resolution on Nov. 8, 2012 – which withdrew the city from the new transit authority the council – also gave direction to the AATA to continue conversations with immediately neighboring communities about options for improving local transit. And the AATA has engaged in talks with communities about a smaller-than-countywide transit authority with possible members to include the cities of Ann Arbor, Ypsilanti, and Saline, as well as the townships of Pittsfield and Ypsilanti. Involvement with the townships of Superior and Ann Arbor is also a possibility.

In addition to expressing an interest that the Ann Arbor DDA not be the only entity providing additional support, committee members indicated they’d also like to see even better service provided on Route #4 – in the form of an “express” route that had no stops between downtown Ypsilanti and Ann Arbor. Ford seemed receptive to the idea in concept, and suggested it might be necessary to think about using I-94 to provide that service. DDA board member Roger Hewitt indicated that he felt one obstacle in the way of Ypsilanti becoming an even more vibrant community is the amount of time it takes to ride the bus between Ypsilanti and Ann Arbor.

Some committee members also questioned the structure of the “all-in” go!pass program requirement – which means an employer must purchase passes for all employees of the company at a cost of $10, even for those who might not ever use the card. It’s part of the reason that the cost per card to employers is relatively low – and until two years ago was even lower ($5).

Part of getDowntown director Nancy Shore’s presentation to the committee included an anecdote about a lost wallet and the holder of a go!pass saying the pass was the most valuable item in their wallet. Hewitt responded to that part of the Shore’s presentation by observing that even though the card holder contended that the go!pass was valuable, that person was not being asked to contribute to its cost – because it’s provided through the employer. Shore’s presentation indicated that many downtown employers see the go!pass as one of the only benefits they’re able to offer to their employees besides salary.

Parking Fund: Beat Cops

After subtracting $50,000 for possible alternative transportation, the remaining $250,000 of discretionary funding in the parking fund budget could be used to pay for downtown beat patrols by the Ann Arbor police department. Based on the conversation at the operations committee meeting on Jan. 25, it’s not a topic on which any recent detailed talks have taken place – but DDA executive director Susan Pollay indicated a strong interest in having those conversations with the city. If that didn’t lead to an agreement with the city, she said, then the board was certainly not obligated to spend the money in that way.

Conversation among committee members was mixed on the idea. Bob Guenzel wondered how much downtown policing $250,000 would buy. [Guenzel was Washtenaw County administrator during the time that some townships litigated over the amount they were being charged by the county for sheriff's road patrols.] John Mouat wondered if the $250,000 might not be spent more wisely on “ambassadors” for the downtown. Of the committee members, Hewitt seemed more enthusiastic about the idea, pointing to ongoing issues in the South University area, where he owns a business.

Hewitt expressed skepticism, at least in the near term, that the relatively new Main Street Business Improvement Zone could eventually be expanded beyond its current geographic boundaries – along a few blocks of Main Street – to include a significant part of the rest of downtown Ann Arbor. In any case,  the Main Street BIZ was, he said, more focused on the “clean” part of the slogan “clean and safe.” So, while the self-assessment used to finance the BIZ might support snow removal and handbill removal, it would not be capable financially of hiring personnel to address the “safe” part of the slogan.

At the committee meeting on Jan. 25, Pollay alluded to the idea that the DDA had harbored an expectation that downtown beat patrols would continue to be provided – as a result of the DDA’s willingness to support the city’s municipal center project. By way of background, the DDA agreed to make an $8 million grant to the city – in the form of roughly $0.5 million in annual installments – to help pay for the city’s police/courts project, known called the Justice Center. That grant to the city comes out of the roughly $4 million in TIF capture that the DDA receives annually. The DDA board’s decision to allocate that grant came at the DDA board’s May 8, 2008 meeting.

In this AAPD officer activity report, 22 minutes were logged on downtown foot patrol.

However, the downtown beat patrols, which some officers chose to do on bicycle, were discontinued, as the total sworn officers in the AAPD decreased through the late 2000s. The strategy used by then-police chief Barnett Jones was to encourage officers to spend their “out of car time” in the downtown area. [For some coverage on that issue from the 2010 budget season, see: "Budget Round 6: Bridges, Safety Services."]

A new digital system for logging officer activity reports rolled out at the start of 2013 and could allow for a realistic assessment of the current level of downtown police coverage.

Parking Fund: Revenue Trends

Parking revenue totals are reported monthly to the DDA operations committee. The most recent month for which data was provided was December 2012. Those numbers show an increase in revenues of about 7.2% compared with December 2011, and a drop in the number of hourly patrons by 8.5%. Those numbers come in the context of a 13% increase in the number of spaces in the system – from 6,870 to 7,805. Mitigating factors cited by Republic Parking manager Art Lowe at the Jan. 25 committee meeting included the fact that Midnight Madness fell this year in November, not December, and that in 2011 Christmas and New Year’s fell on the weekend.

Lowe also indicated that some of the decrease in the number of hourly patrons is attributable to the conversion of parking patrons from hourly parking patrons to monthly permit parkers. Above a certain threshold, for the same amount of parking activity, a monthly permit holder would be paying less for their parking. Based on numbers provided by Lowe at the meeting, and subsequent clarification with DDA staff, it appears that around 3,600 monthly permits were in play for December 2012, compared with around 3,100 for the previous year.

Lowe also said that the Fourth and William structure was likely seeing some incremental erosion of its previous patrons, as a result of the new nearby Library Lane underground garage.

Another highlight evident in the charts is the fact that the Library Lane underground structure, completed in the summer of 2012, has now reached the same revenue-per-space numbers as the on-street metered parking spaces.

And in a month and a half, capacity of the public parking system will be getting an additional 95 spaces. At the operations committee meeting, executive director Susan Pollay told the board that Village Green was still on track to hand over the parking deck component of the City Apartments project to the city and DDA on March 15, 2013. The building included a 244-space parking deck on those first two floors, 95 of which are to be available for public parking. The rest of the spaces will be used by residents of the 146-unit project, when the construction is completed.

That announcement of a March 15 handover was met with some skepticism on the operations committee – because the structure will still need a certificate of occupancy from the city before the transfer can take place. However, it was generally understood that the intent was for the parking deck to be open before construction of the entire project was completed. The building is on track for fall 2013 move-in, based on remarks from Pollay to committee members.

Ann Arbor Public Parking System: Total Revenue

Ann Arbor Public Parking System: Patrons

Ann Arbor Public Parking System: Structures

Ann Arbor Public Parking System: Surface Lots

Ann Arbor Public Parking System: Whole System

TIF Fund Budgeting

While the DDA’s budget is dominated by its administration of the parking system, that’s not a function assigned to the DDA by state statute. But it’s a function the DDA has performed for the city since the early 1990s.

The part of the DDA’s revenue budget that’s enabled by state statute comes from tax increment financing (TIF). Under a TIF arrangement, an entity “captures” a portion of the property taxes in a specific geographic area that would otherwise be collected by taxing authorities in the district. In the case of the Ann Arbor DDA, taxes captured include those of the Ann Arbor District Library, Washtenaw County, Washtenaw Community College, and the city of Ann Arbor. The tax capture for the Ann Arbor DDA is only on the initial increment in valuation – the difference between the value of property when the district was established, and the value resulting from improvements made to the property. In other words, the Ann Arbor DDA’s TIF doesn’t capture increases due to inflation.

For each of the next two years, the DDA is projecting around $4 million of revenue from its TIF capture. Big-ticket expenditures from the TIF fund include $3.4 million for bond payments and interest, as well as $508,608 as an annual contribution toward the city’s police/courts building.

The TIF fund budget also includes $440,631 for approximately half of the salaries, fringe benefits and administrative costs of the DDA. [The DDA splits these costs roughly evenly between the TIF fund and the parking fund. The DDA has four employees.] For the next year, the DDA is planning to spend about $1.3 million more from the TIF fund than the revenues it will receive, drawing down the TIF fund balance by that amount. That would leave about $800,000 in the TIF fund balance.

Included in the FY 2014 TIF budget is $300,000 that could be used somewhat flexibly – which is labeled “capital construction.” At the Jan. 25 operations committee meeting, DDA executive director Susan Pollay told members that the money could be used to fund sidewalk improvements between William and Liberty along State Street to facilitate patio dining for restaurants along that strip – or streetscape improvements for William Street, or even alley improvements near the Bell Tower Hotel.

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This go!pass, subsidized by the Ann Arbor Downtown Development Authority, lets its holder ride AATA buses an unlimited number of times.

If I rode the AATA buses to and from work every day and paid the full $1.50 fare each way, the cash value of that card would be about $750 per year. Of course if I were actually riding the bus that frequently, I’d be somewhat better off purchasing a 30-day pass for $58 a month, which would come out to just a bit under $700 annually.

What I actually paid for that card this year was $10 – just a bit over 1% of its potential cash value.

So what sort of dark magic subsidizes my potential rides on AATA buses? And why do I have access to this magical go!pass card, when you, dear Chronicle reader, likely do not?

Along the road to answering these questions, I’d also like to make a proposal. It’s a vision for broadening the program, getting more transit passes into the hands of Ann Arbor residents, and expanding the possible uses for the go!pass – including (shudder) the ability to use a transit pass to pay for parking.

Policy Choices Already Made: Charge More for Parking

A cynical explanation of my public transportation subsidy would go like this: On average, the unwitting motorists who park their cars in Ann Arbor’s public parking system pay prices set 3% higher than necessary; and this 3% “surcharge” is used to subsidize the bus rides of go!pass holders.

The percentage is basically right – because Ann Arbor’s public parking system generates about $15 million in revenue annually, and the annual subsidy required to pay for the rides taken by go!pass holders is about $500,000. And that $500,000 is, in fact, allocated from the fund that receives parking revenues.

But before you conclude that bus riders are benefiting at the expense of motorists, it’s worth considering the benefit to motorists from this subsidy: fewer cars on the road, which means better traffic flow for motorists; less competition among motorists for parking spaces; and reduced need to reserve for capital replacement and new construction of parking structures, which relieves some upward pressure on parking prices.

And if you’d like to argue against the go!pass transportation subsidy on the grounds that this “surcharge” on parking prices is effectively a tax – one that we voters never approved – then it’s worth considering that the total “surcharge” applied by the Ann Arbor public parking system is actually closer to 20%, of which only 3% goes to subsidize transportation. The other 17% is baked right into the contract with the city of Ann Arbor, under which the Ann Arbor Downtown Development Authority operates the city’s public parking system.

Under the terms of that contract, the city receives 17% of gross parking revenues, which the city uses to “subsidize” various general fund activities – like the salaries of police officers, firefighters, city planners, and allocations to human services nonprofits.

So when mayor John Hieftje talks about how he wouldn’t trade Ann Arbor’s budget situation for that of any other city in Michigan, it’s easy to understand why: Dealing with tight financial times is easier when you can cover the first 2% or so of your general fund budget with revenues from your public parking system. Other cities in Michigan don’t necessarily have the option to cover a general fund budget gap through increased parking prices.

In any case, I think it’s sound public policy to analyze the subsidy provided for go!passes as an investment in the city’s transportation infrastructure. I think it’s less sound to treat the public parking system as a way to backstop the general fund.

But my point in writing is not to argue the merits of either policy choice. Those policy choices are already currently in place. What I’m suggesting is that now is a good time to reflect on the specifics of how the transportation subsidy is allocated.

How Is the Transportation Subsidy Allocated?

The go!pass program is administered by getDowntown, but the entity that makes the policy choice on allocation of the go!pass subsidy is the board of the Ann Arbor DDA. That’s a function of the fact that the DDA manages Ann Arbor’s public parking system under contract with the city. And in broad strokes, as long as the city gets its contractually obligated 17% of gross revenues, the DDA has latitude to expend parking system revenues according to the collective wisdom of its board.

For around 10 years, a transportation subsidy has supported the go!pass program, which is available only to Ann Arbor downtown employees. I get my go!pass card through the Workantile, a downtown coworking community.

At its June 2, 2010 meeting, the DDA board made a three-year allocation from the parking fund for the go!pass subsidy: $445,672 for FY 2011; $488,054 for FY 2012; and $540,060 for FY 2013, the current year. This money is paid to the AATA to cover the cost of rides that go!pass holders take. The size of that subsidy is a function of at least two factors.

First, go!pass holders take a lot of rides on AATA buses. During the 12 months between Oct 1, 2011 and Sept. 30, 2012, they took about 604,000 rides. That reflected a slight dip in go!pass ridership, down from 634,000 rides in the previous year.

go!pass total rides by year. The number of rides taken with go!passes has roughly doubled since 2004. This past year reflected a dip, which appears to be related to a reduced number of cards in circulation: 6,591 compared to 7,226. (Data from AATA; chart by The Chronicle.)

go!pass rides by month, year over year. The red trend line is the most recent year, 2012. The previous year is shown in black. (Data from AATA; chart by The Chronicle.)

While the total number of rides dipped slightly, the number of rides per card continued its upward trend. Since 2004, the number of rides per card has increased from about 60 to about 90. (Data from getDowntown program; chart by The Chronicle.)

The size of the needed subsidy is also partly a function of AATA policy. At its Aug. 24, 2011 meeting, the AATA board voted essentially to calibrate the cost of the go!pass rides to the amount of money the DDA had already allocated, instead of calculating the actual cost, which would likely have been more.

The size of the subsidy that’s needed to support bus rides taken through the go!pass program is also reduced somewhat by the $10 cost that’s charged to a company for each employee’s go!pass. And a go!pass program rule further amplifies the effect of the $10 cost per go!pass. That rule requires participating downtown employers to purchase passes for all their employees – at a cost of $10 a year. So companies are required to be “all-in” with the go!pass program.

Say a 20-person company participates in the program, but only five employees think they’ll ever want to ride the bus, for whatever reason. That 20-person company is still required to purchase 20 go!passes at $10 apiece. The $150 collected for those 15 go!passes – which will likely never be used – helps offset the cost of the rides taken with the five other cards, which could be heavily used.

From presentations I’ve seen getDowntown executive director Nancy Shore give, the Workantile’s pattern of go!pass usage is typical. A few card holders take a relative large number of rides, while the “long tail” of cards shows relatively little use:

Workantile go!pass usage.

So the financial effect of the “all-in” requirement is to reduce somewhat the amount of additional subsidy that is needed, with the cost of little-used cards partly offsetting the cost of the rides taken with heavily-used cards.

But the “all-in” requirement is not financially motivated. Instead, it’s seen mainly as a way to put a bus pass in the hand of someone who might otherwise never even consider using the bus to get somewhere. And that person might wind up taking a couple rides, and might even add the bus as an occasional option to satisfy their travel needs.

That makes sense to me – putting a convenient, economical tool for accessing public transportation in as many hands as possible, on the theory that it might help win some converts. Some of those converts might add to the nice meaty head of the “long tail,” but others might help shorten and thicken up that tail.

With that in mind, why do those hands we’re putting these bus passes in have to be attached the ends of arms belonging to downtown employees?

Bus Passes for Everyone

I would make two observations. First, the go!pass program is a success measured in terms of participation and ridership. But I think the subsidy is greater than it needs to be to achieve the goals of the program. I think there’s a lot of room to increase the $10-per-card cost, without diminishing the fact that these go!passes would still be an incredible bargain to a cardholder or to a company. But some revision to the “all-in” requirement for downtown businesses might be required.

Second, ordinary Ann Arbor folks who own property and pay the 2 mill transit tax are susceptible to the same incentives and influences that downtown employees are. If you put a convenient, economical tool for accessing public transportation in all of their hands, you might make converts to public transportation out of them as well.

The DDA board will, between now and April 2012, weigh the question of continuing to support the go!pass program – because the three-year allocation goes only through this fiscal year, which ends on June 30, 2013. If the board were to maintain the public transportation go!pass subsidy at roughly current levels – around a half million dollars a year – but reduce the public transportation subsidy just for downtown employees, that subsidy could be extended to a broader group of people.

So here’s what I’d like the DDA board to consider: Begin a transition from the DDA’s historical approach to the go!pass subsidy, which is downtown-employee centric, to one that is more broadly inclusive of Ann Arbor. I’m not suggesting that we pull the rug out from under the go!pass program all in one go. But eventually, I’d like to see the following kind of program replace the current go!pass.

• A physical swipe-able transportation card would be sent to every Ann Arbor address that pays property taxes – because the card would be included in the tax bill. Any registered voters who were missed in that mailing would also receive a card. Having such a card would simply be part and parcel of living in Ann Arbor. They’d be as ubiquitous as library cards. Such cards could also be obtained by any non-resident for, say $10.
• The transportation cards would be issued in a “pre-loaded” state with, for example, 20 bus rides or 10 hours of parking. You could swipe it to board a bus, or to pay for your downtown parking. So this subsidy would be available broadly, not just to downtown employees. But it wouldn’t be as generous as the current subsidy to downtown employees.
• Additional value could be loaded onto the cards though online purchase or at automated kiosks at the downtown AATA transit center, which is being rebuilt. To make the kiosks a reality, though, the AATA would need to re-think some choices on that new transit center building it’s starting to build. At its Oct. 18, 2012 meeting, the AATA board opted to add the cost of LEED certification to the budget of the new transit station, but not to include the cost of automated ticketing kiosks.

The DDA board will be holding a retreat on Nov. 16. That would be a good occasion to engage in the higher-level policy discussion that could lead to such a transit pass program, funded with public parking revenues.

Other Ridership

Though it’s unrelated to my specific proposal, this column seems like a good repository for some additional data on other subsets of AATA ridership (University of Michigan affiliates) and other modes of transportation (Amtrak). So here it is:

University of Michigan ridership on AATA buses by month from 2005-2012. The most recent year is the red trend line. The previous year is the black trend line.  (Data from AATA; chart by The Chronicle.)

University of Michigan ridership on AATA buses – yearly totals: 2005-2012.  (Data from AATA; chart by The Chronicle.)

Total ridership on AATA fixed route service by month from 2004-2012. The most recent year is the red trend line. The previous year is the black trend line. (Data from AATA; chart by The Chronicle.)

Total ridership on AATA fixed route service yearly totals from 2004-2012. (Data from AATA; chart by The Chronicle.)

Total boardings and deboardings at the Ann Arbor Amtrak station, located on Depot Street. The most recent year is the red trend line. The previous year is the black trend line. Last year the monthly totals showed Amtrak on pace to set a record through May, but numbers dropped from May through the rest of the year, when compared to the previous year’s highs. This year tracked about the same as last year through March, dropped, but recovered in June and July and was back to previous years’ highs in August and September. (Data from MDOT; chart by The Chronicle.)

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Amtrak train pulling away (despite appearances) from the Ann Arbor station on Jan. 25, 2012. Later that same day, Ann Arbor Transportation Authority buses converging on downtown Ann Arbor's Blake Transit Center. (Photos by the writer.)

The Chronicle is taking the pause between council meetings as an opportunity to offer readers a look at Ann Arbor’s current bus system ridership numbers over the last several years.

Part of a 30-year transit vision developed by the AATA includes the relocation of the Amtrak station – from Depot Street to a spot in the city’s Fuller Park. The proposed city/University of Michigan collaboration on the Fuller Road Station includes a large parking structure for the UM medical complex as its first phase. So we’re also taking a look at current ridership data on the Amtrak line through Ann Arbor.

Ann Arbor’s regular fixed route bus system provided 5.95 million rides for fiscal year 2011, which ended Sept. 30, 2011. That’s slightly better than the previous year, but was slightly off the record high year of 6.02 million rides delivered in FY 2009. The first three months of the 2012 fiscal year – October, November and December 2011 – show slight increases over the monthly numbers for FY 2011.

Of those 5.95 million rides provided by AATA in FY 2011, 2.43 million of them (41%) were provided through the University of Michigan MRide program – which allows faculty, students and staff of the university to board AATA buses without paying a fare. The cost for the service is paid by UM to the AATA. It was a record-setting year for the MRide program.

Also making up a portion of those 5.95 million rides were trips taken by holders of the getDowntown go!pass program, which allows downtown Ann Arbor employers to provide free bus passes for their employees for a nominal cost – the cost of the rides is funded through a grant from the Ann Arbor Downtown Development Authority.

In FY 2011, 634,000 rides were provided under the go!pass program – a 23% increase over FY 2010, adding to the trend of monotonically increasing numbers of go!pass rides over the last decade. The first three months of FY 2012 don’t show the same kind of double-digit increases for go!pass use as FY 2011 – they’re tracking roughly the same as last year.

The number of riders getting on and off the Amtrak trains that passed through Ann Arbor during the 2011 calendar year was 141,522. That figure tracked close to the same level of activity the station has seen since 2006 – from 140,000 to 145,000 riders. Through May 2011, Amtrak was on pace to eclipse the record number of riders in 2010 (145,040). But starting in July 2011, ridership was lower in every month (compared to 2010) through the end of the year.

Charts and graphs by The Chronicle – as well as more detailed breakdowns – are provided after the break.

Overall Ridership on AATA Buses

AATA operates on a fiscal year that runs from Oct. 1 through Sept. 30. The data provided by the AATA to The Chronicle is organized based on that time period.

Figure 1. Total AATA Fixed Route Ridership by Year (Image links to larger file)

Figure 2. Ridership on AATA Fixed Route by Month 2004-2011 (Image links to larger file)

Fiscal year 2006 was the first year that AATA ridership crossed the 5 million-ride threshold on its regular fixed route service. By 2008, ridership was just under 6 million and actually nudged past 6 million in 2009. Ridership has remained relatively level over the four years from 2008 to 2011. In 2010, there was a dip of about a quarter million rides, but in FY 2011, the most recent full fiscal year, the number was again just shy of 6 million at 5,954,569. [See Figure 1.]

Figure 2 includes the ridership trend through the first three months of FY 2012 – October through December of 2011. Comparing the dark red line (FY 2012) with the heavy black line (FY 2011) shows an increase in each month of about 30,000 rides.

UM Ridership on AATA Buses

About 40% of rides on the AATA regular bus system are taken by University of Michigan students, faculty and staff under the MRide program. The program is commonly described as one that allows UM affiliates to “ride for free,” which is a chafing point for AATA public relations staff. The program does allow UM affiliates to board AATA buses without paying a fare. But the cost of the rides is intended to be compensated through payments UM makes to the AATA under the MRide contract.

The first MRide agreement was for a five-year period from Aug. 1, 2004 to July 31, 2009. When negotiations between UM and the AATA did not produce a new five-year agreement by July 31, 2009, the two organizations agreed to a one‐year extension of the original agreement for the period from Aug. 1, 2009 to July 31, 2010. Under that arrangement, UM paid AATA a total $1,987,642 to cover the cost of UM affiliate rides.

Then at its Sept. 16, 2011 meeting, the AATA board ratified a new five-year deal from 2010-2015. One difference between the previous agreement and the one that the board considered and approved at the Sept. 16 meeting is that the new arrangement makes explicit a per-boarding amount to be paid by UM. In the previous arrangement, UM agreed to pay a lump sum for the boardings, with additional money contributed through a federal grant for which UM is eligible.

While the federal grant is still a component of the new MRide arrangement, the boarding payment is now explicitly tied to the number of rides taken by UM riders. The current agreement is for UM to pay AATA $1 per ride. The regular fare for AATA buses is $1.50. The MRide rate is based on the cost per ride paid by holders of a 30-day pass, which costs $58. The previous arrangement had worked out to around $0.80 per ride, though it was not defined that way in the contract.

Although early in the MRide negotiations there was some consideration given to UM charging a partial cost of rides directly to its riders through the new swipeable fare box technology recently installed in AATA buses, that possibility was quickly taken off the table.

The count of UM riders is achieved by UM riders swiping their MCards through the AATA fareboxes. However, the usage data is provided to UM, and AATA does not have access to statistics on who is riding the buses – faculty, staff, or students. That information can be analyzed by UM, however.

Figure 3. UM Ridership on AATA Buses by Year (Image links to larger file)

Figure 4. UM Ridership on AATA Buses by Month (Image links to larger file)

By 2008, ridership in the MRide program had more or less stabilized at around 2.3 million rides per year. In the most recent year – FY 2011 – the program had 2.4 million rides [see Figure 3]. The monthly trend for the first three months of FY 2012 shows an increase in MRide program ridership in each month, compared to FY 2011 [see Figure 4]. In December 2011, that increase was only about 10,000 rides, compared to almost 20,000 more rides in January and February. December is a typical trough for MRide ridership numbers, which show seasonal variation tied to the academic calendar.

go!pass Ridership on AATA Buses

Another bus pass program accounts for about 10% of AATA regular bus ridership – getDowntown’s go!pass program. Under the program, downtown Ann Arbor employers can purchase bus passes for their employees at $10 apiece. Participating employers must purchase passes for all their employees. The passes are good for unlimited rides on AATA buses.

The cost of the rides has historically been carried by payments from the Ann Arbor Downtown Development Authority out of its parking fund. At its June 2, 2010 meeting, the DDA board authorized a three-year grant to fund the go!pass program – $445,672 for FY 2011; $488,054 for FY 2012; and $540,060 for FY 2013.

In the past, the AATA has adjusted the charge to match actual ridership – which means that the amount of the DDA grants would likely need to increase as well, if that policy continued. However, a financial crunch at the DDA led the AATA to modify the amount it charges for rides taken under the go!pass program. At its Aug. 24, 2011 meeting, the AATA board voted to set the charges at the same amount for which the DDA had provided grants.

Figure 5. go!pass Ridership on AATA Buses by Year (Image links to larger file)

Figure 6. go!pass Ridership on AATA Buses by Month (Image links to larger file)

Figure 5 shows that the number of rides taken with the go!pass has increased steadily since 2004. That’s partly due to the steadily increasing number of go!passes in circulation. From FY 2010 to FY 2011, the number of passes sold jumped about 10% – from 6,537 to 7,226.

Ridership was up 23% in FY 2011 compared to FY 2010. It’s conceivable that some of the increase could be attributable to a change in the way go!pass ridership data is collected. It’s now collected with swipeable cards that pass holders run through the fare box, instead of depending on a driver’s manual button press. That change started on Nov. 1, 2010.

On the theory that fewer undercounting errors might be associated with a swipeable card system, some increase in the number of rides might be expected due purely to the change in data collection. However, in FY 2008, the program also had a ridership increase that outpaced the increase in passes sold – a 20% increase in ridership with a 5% increase in go!pass circulation. There was no change in data collection method at that time. In addition, there does not seem to be a similar bump in MRide ridership associated with the same change in data collection method, implemented in 2009.

Through the first three months of FY 2012, ridership on the go!pass program is tracking fairly close to FY 2011 [see Figure 6].

Ann Arbor Amtrak Ridership

Ann Arbor is one of the stations on Amtrak’s Wolverine Line, which runs from Pontiac through Detroit to Chicago. Amtrak ridership data is provided online by the Michigan Dept. of Transportation. Service is three times a day in each direction, for a total of six train stops a day. The schedule, westbound and eastbound is: 7:48 a.m. WB, 12:29 p.m. WB, 1:04 p.m. EB, 5:45 p.m. EB, 7:17 p.m. WB, 11:32 p.m. EB.

Figure 7. Ann Arbor Amtrak Ridership by Year (Image links to larger file)

Figure 8. Ann Arbor Amtrak Ridership by Month (Image links to larger file)

In the early part of the 2000s, ridership through the Ann Arbor station climbed steadily to reach 140,000 riders in 2006. [That counts passengers either getting on or getting off the train in Ann Arbor.] Since then, ridership has remained in the range of 140,000-145,000 except for 2009, when there was a clear dip – to about 126,000. That off year could be explained by the economic downturn in the fall of 2008, and by the the fact that average Ann Arbor area gas prices fell from over $4 per gallon in July 2008 to under $2 per gallon by January 2009 [see Figure 7].

Ann Arbor’s Amtrak ridership started off 2011 on a record-setting pace through April, which continued a bit less dramatically through May and June. By July, however, ridership numbers fell below the 2011 figures for every month through the end of 2011. That could be explained in part by decreases in the quality of on-time performance associated with speed restrictions placed on the track by its owner Norfolk-Southern in June 2011. The speed restrictions stem from the need to upgrade the track. Rather than undertake the track work necessary to allow for regular speeds, Norfolk-Southern elected to impose the speed limits. [As an example, the 5:45 p.m. scheduled arrival on Jan. 24, 2012 was 68 minutes late.] And in May 2011, the Detroit News published a column extolling the virtues of the car trip between Detroit and Chicago.

In October 2011, MDOT struck a deal with Norfolk-Southern to purchase the 135 miles of track between Kalamazoo and Dearborn. Track improvements, funded by federal stimulus money, are expected to allow the speed restrictions to be lifted.

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Part of the discussion at the DDA transportation, operations and construction committee meeting included the “two-inch” rule on vertical sidewalk displacement. A law working its way through the state legislature would establish that a city is presumed to have maintained a sidewalk properly, but that can be rebutted by evidence showing that the proximate cause of an injury was a “vertical discontinuity” defect of 2 inches or more in the sidewalk. (Photo by the writer.)

Members of the DDA’s transportation, operations and construction committee were briefed on that and a number of other issues at its regular monthly meeting on Wednesday, Sept. 28. (The committee has a combined function for what were at different times in the past three separate committees.)

The committee was also briefed on: (1) the status of the getDowntown program; (2) a parking communications plan aimed at evening employees; (3) the financial picture for the city’s public parking system; and (4) the results of a parking customer satisfaction survey.

Committee members were somewhat surprised and disappointed to learn that the city council’s policy on the use of proceeds from the proposed sidewalk millage would place restrictions on using millage money inside the boundaries of the DDA’s TIF district.

The city council’s Aug. 4 resolution authorizing ballot language for the proposed 0.125 mill tax places a limitation on the use of funds inside the TIF district, though the wording on the ballot does not include the limitation. The resolution states that inside the DDA district, only those sidewalks adjacent to single- and two-family houses (but not other commercial properties) would be included in a millage-supported sidewalk repair program.

A resolution of intent on the use of the sidewalk millage, which includes the restriction inside the DDA TIF district, was postponed from the council’s Sept. 19 meeting, and will be taken up by the council again on Oct. 3.

At their Wednesday meeting, DDA committee members were also apprised that the getDowntown program, which draws the majority of its funding from the DDA, will not be folded into the DDA as had previously been planned. Instead, the program’s two staff members will remain employees of the Ann Arbor Transportation Authority. The getDowntown program’s status has been a question since the Ann Arbor Area Chamber of Commerce (now the Ann Arbor/Ypsilanti Regional Chamber) two years ago pulled out of the four-way partnership that supported getDowntown. The remaining three partners are the city of Ann Arbor, the DDA and the AATA.

The committee was also briefed on elements of the DDA’s communications plan that’s aimed at downtown evening employees, in connection with possibly extending parking meter enforcement hours past 6 p.m. Other parking-related issues on the committee’s agenda included a structure-by-structure breakdown of the financial performance of the city’s parking garages, as well as an overview of the results of a regular parking system survey used to evaluate Republic Parking, the DDA’s parking contractor.

This report focuses on sidewalks and getDowntown.

Sidewalks

On the Nov. 8 ballot are two questions for Ann Arbor voters. The first is the renewal of an existing street repair millage. The city is asking voters to approve the levy of a 2.0 mill tax for resurfacing and reconstructing streets and bridges. A mill is $1 for every $1,000 of taxable value of a property.

Also on the ballot is a proposal that asks voter to authorize an additional 0.125 mills for sidewalk repair. The sidewalk repair levy would be contingent on the street repair millage also receiving approval. Currently, the city’s ordinance on sidewalk repair places responsibility for maintenance and repair of sidewalks on the owner of the adjacent property. That ordinance would be amended, if the millage is approved.

The city council resolution authorizing the ballot language for the sidewalk millage – approved at the council’s Aug. 4 meeting – directs the city attorney to prepare an ordinance revision, in the event the sidewalk repair millage wins voter approval.

Sidewalks: Restriction on Use in the DDA District

At Wednesday’s meeting, deputy DDA director Joe Morehouse apprised the committee of the policy associated with the proposed sidewalk repair tax levy, which restricts its use inside the DDA district. The staff memo accompanying the city council resolution reads [emphasis added]:

The sidewalk repair millage, if approved, will be used only for the sidewalks adjacent to properties that are on the City’s tax roll, which excludes schools, churches and city owned properties as well as those owned by the University of Michigan. The excluded properties would be responsible for their own sidewalk repairs as they are now. For the first year FY 2013, the estimated net revenue for the sidewalk repairs is $563,000.00 after deductions for the DDA. Properties other than single- and two-family homes within the DDA district will continue to be responsible for their own sidewalk repairs as before.

The Aug. 4 resolution authorizing the ballot language included a separate resolved clause reflecting the restriction mentioned in the staff memo [emphasis added]:

RESOLVED, That the proposed City managed sidewalk trip hazard repair program include the sidewalks adjacent to all properties on the city’s tax roll, but excluding those properties within the DDA district that are not single- and two-family because those properties can benefit from the tax dollars deducted from the proceeds of the new millage and given to the DDA; and …

A resolution of intent on millage expenditures, considered by the council at its Sept. 19 meeting, also reflects the exclusion of some properties in the DDA district from eligibility for sidewalk millage expenditures:

To the extent the 2012 Street and Bridge Resurfacing and Reconstruction and Sidewalk Repair Millage is used for the repair of individual sidewalks slabs, it will be used only for sidewalks adjacent to all properties outside the Downtown Development District against which the City levies property taxes and adjacent to single- and two-family houses within the Downtown Development District against which the City levies property taxes.

A vote on the resolution of intent was postponed by the council until Oct. 3. However, the DDA exclusion drew a query from councilmember Christopher Taylor (Ward 3), who appeared puzzled about the motivation behind the exclusion. From the Sept. 19 Chronicle meeting report:

Taylor then asked what the rationale was for the restrictions on spending within the DDA for properties that are not single- or two-family houses. [Homayoon Pirooz, head of project management for the city] noted that it’s part of the ballot language the council had approved in August. The rationale, he said, was that the DDA receives a share of the street repair millage [through its tax increment finance capture district] so it makes sense for the DDA to cover the costs within its geographic district.

[While the DDA exclusion is not part of the ballot language, it is a part of the city council resolution authorizing the ballot language.]

Sidewalks:  TIF and the Sidewalk Millage

As Pirooz explained to Taylor, the rationale for excluding some properties inside the DDA district from a millage-funded city sidewalk repair program is that the TIF capture inside the DDA’s district would provide a portion of those millage revenues to the DDA.

By way of background, it’s worth noting that not the entire millage is captured. Only the difference between the baseline property value in the district and the increase in property value due to improvements (the “increment” in tax increment finance district) is captured by the DDA’s TIF.

For fiscal year 2012 (the current fiscal year, which started July 1), the valuation of the increment in the DDA district is $137,800,186. So the DDA’s capture is roughly $17,500 (.125*137,800,186/1000). The city of Ann Arbor’s baseline tax revenue inside the district due to the sidewalk repair millage would be around $31,500. So, of the $49,000 the DDA district would generate through the sidewalk millage levy, the DDA would receive about 36% of it.

At one point during Wednesday’s committee meeting, DDA executive director Susan Pollay ventured that it would not be possible to fix every qualifying sidewalk in the DDA district for $17,500.

Sidewalks: Committee Member Discussion

As one measure of the lack of communication between the city and the DDA on this issue, the committee began their meeting on Wednesday under the impression that the ballot language was still an open question. [Ballots are already being mailed to those voters who've requested to vote absentee.]

John Mouat said he felt it was “pretty outrageous” that the council proceeded with that policy without talking to the DDA. It doesn’t seem unreasonable to be “a little peeved” about it, he said. Roger Hewitt indicated agreement with Mouat, but said he couldn’t say he was surprised about the lack of communication.

(Image links to higher resolution image) This screenshot from Washtenaw County’s mapping system shows the nearly 30-foot distance between the sidewalk edge and the parcel edge along South University Avenue. DDA executive director Susan Pollay brought up this distance during the Sept. 28 committee meeting.

Leah Gunn summed up the policy by noting that there are commercial property owners who will have to pay the tax, but won’t get the benefit of the millage.

DDA executive director Susan Pollay raised a question about University of Michigan property mentioned in the staff memo – there’s a lot of UM property in the DDA TIF district. [UM does not pay property taxes, so there are no taxes from the UM for the DDA's TIF district to capture.] Pollay noted that the city’s right-of-way extends well past sidewalks next to UM property in many instances.

Bob Guenzel wondered if there were an implicit obligation that the DDA would incur to repair the sidewalks in the DDA district that are not single- or two-family houses. Guenzel clarified with Morehouse that it would still be a commercial property owner’s responsibility to keep up the sidewalk.

Sidewalks: Liability, Open Questions

Pollay indicated that she had a meeting scheduled with city staff so that she could get a better understanding what the city’s expects of the DDA.

For example, she said, she wanted to know if the city was assigning trip-and-fall liability to the DDA. Gunn ventured that liability would end up being decided in a court case.

Nader Nassif, a local attorney and newest member of the DDA board, said it was not his specialty, but ventured that most slip and falls for sidewalks come under the “open and obvious danger” rule. [On that doctrine, the open and obvious character of a situation can be used to argue that the situation itself serves as adequate warning to a reasonable person that a danger is present and can reasonably be expected to protect himself against it.]

Joan Lowenstein mentioned a rule-of-thumb that there needs to be more than a 2-inch height differential in order to create liability. But she said there’d been a recent change in the law, and she hadn’t kept up with it.

Lowenstein summarized her understanding by saying that if a sidewalk is unsafe, the city is ultimately responsible. But if the city points it out to the property owner, then it’s clearly the property owner’s responsibility. [That is consistent with the city's current approach: Property owners are required by ordinance to maintain and repair sidewalks abutting their property, and the city has systematically pointed out sidewalk problems to property owners.]

Sidewalks: Two-Inch Rule

The two-inch rule to which Lowenstein referred is under consideration by the state legislature. A bill passed by the state House of Representatives in the summer of 2011 clarifies that the presumed governmental immunity extends explicitly to cities and not just counties. The Michigan Supreme Court, in Robinson v. City of Lansing, had reached the conclusion that the existing rule only applied to sidewalks adjacent to county roads. [.pdf of analysis of the bill including the court case.] The state Senate has approved a similar bill, but neither chamber has yet taken up the other’s bill.

The intent of the legislature is to write a law that would extend the presumption of immunity and the two-inch rule to other municipalities, including cities. The legislation would make it more difficult for a plaintiff to prevail in a lawsuit against a municipality. Ann Arbor city attorney Stephen Postema and assistant city attorney Bob West lobbied the House judiciary committee in favor of the bill.

In relevant part, House Bill 4089 reads, with revisions from an initial version indicated in italics and strikethrough:

(3) In a civil action, a municipal corporation that has a duty to maintain a sidewalk under subsection (1) is presumed to have maintained the sidewalk in reasonable repair. This presumption may only be rebutted by evidence of specific facts showing that the a proximate cause of the injury was 1 of the following:
(a) a vertical discontinuity defect of 2 inches or more in the sidewalk.
(b) a dangerous condition in the sidewalk itself of a particular character other than a vertical discontinuity.

State Rep. Jeff  Irwin (D-District 53), who sits on the House judiciary committee, represents a district that includes most of the city of Ann Arbor. In an interview with The Chronicle in the summer of 2011, shortly after the bill passed the House, Irwin said he supported it after some initial concerns were addressed.

Among those concerns was the initial wording that indicated “the proximate cause” – which was eventually amended to read “a proximate cause.” Irwin said that to show something was “the proximate cause” would require showing not only that it was a proximate cause, but also that there were no other proximate causes – a burden he felt was not appropriate.

A second revision Irwin wanted and achieved was the deletion of the word “specific” in the phrase “specific facts.” He told The Chronicle that the phrase seemed to create two species of facts – specific facts, and other kinds of facts. He did not know what the possible difference was between those two kinds of facts.

getDowntown Program

By way of basic background, the getDowntown program is a partnership among the DDA, the Ann Arbor Transportation Authority and the city of Ann Arbor. The program acts as a commuter consultancy for downtown employees, promoting alternatives to driving a single-occupancy vehicle to work. As part of a three-year funding plan approved in June 2010 for fiscal years 2011-13, the getDowntown program will receive roughly $500,000 each year from the DDA for FY 2012 and FY 2013. The bulk of the funding is to subsidize the cost of rides for holders of a go!pass.

The go!pass is a card that allows employees of downtown businesses to board AATA buses on an unlimited basis without paying a fare on boarding. Their rides are paid by the DDA out of public parking revenue it receives under its contract with the city of Ann Arbor for managing the public parking system. Employers purchase go!passes for their employees for a cost of $10 per year.

getDowntown Program: Finding a Home – DDA

At its July 6, 2011 meeting, the DDA board was briefed on the status of the getDowntown program. At that point, a tentative decision appeared to have been made to absorb the two getDowntown staff members into the DDA. From that meeting report:

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

At the Oct. 7, 2009 meeting, Mouat had mentioned the issue as part of his regular monthly committee report to the board. And it came up again at the board’s May 7, 2010 meeting.

A question from DDA board member Leah Gunn clarified that the issue being considered is not the physical location of getDowntown’s offices, but rather the administrative payroll issue: Which organization will formally employ the getDowntown program’s two staff?

Mouat explained that currently the two staff are employees of the AATA. The transportation committee is looking at the possibility of transferring the responsibility to the DDA. Mouat characterized it as a “nice fit” from a funding perspective – both getDowntown and the DDA have a focus on the downtown. The mission of getDowntown is also connected to the planned implementation of transportation demand management in the parking system, Mouat said.

Another advantage is that AATA’s contribution via a federal Congestion Mitigation Air Quality (CMAQ) grant is administratively easier, if getDowntown is separate from the AATA, Mouat said.

The impact on the DDA, Mouat said, would be that deputy DDA director Joe Morehouse would do the books, executive director Susan Pollay would do the employee evaluations, and the two staff would become employees of the DDA.

getDowntown Program: Finding a Home – AATA

But at the Sept. 28 DDA committee meeting, getDowntown director Nancy Shore told committee members that it now appeared that getDowntown staff would remain employees of the AATA.

Shore began by describing how getDowntown had been part of the Ann Arbor chamber for its first 10 years. When that organization had financial difficulties, she said, getDowntown staff were absorbed by the AATA. The advisory board for getDowntown had a 1.5-2 year discussion and had made a decision that getDowntown would become a part of the DDA.

[The getDowntown advisory board incudes: Andrew Brix, energy coordinator for the city of Ann Arbor; Eli Cooper, transportation program manager for the city of Ann Arbor; Susan Pollay, executive director of the DDA; Mary Stasiak, manager of community relations for AATA; and Ken Anderson, community relations coordinator for the AATA.]

Absorption into the DDA would have made getDowntown staff into city employees, Shore told the committee. The DDA would have done the bookkeeping and administered the payroll for getDowntown.

But two months ago, Shore said, with the fluxuation in municipal governments and with the situation with the DDA, a decision was made to maintain the current arrangement, with getDowntown a part of the AATA. As another point in favor of remaining with the AATA, Shore pointed to the possibility of the program’s physical housing on the second floor of the newly reconstructed Blake Transit Center [to be started in the spring of 2102].

getDowntown: Committee Discussion – Program Status

Leah Gunn wanted to know if staying with the AATA would change how Shore did her job: “Are you comfortable with this?” Gunn asked Shore. Shore told Gunn she was comfortable with the arrangement. She said she was trying to keep the program sustainable. For businesses who participate in the go!pass program, it will feel the same, she said. Gunn praised Shore, by telling her that when Shore had come on board at the getDowntown program, she “took it to a whole new level.”

Bob Guenzel confirmed with Shore that it’s currently the AATA that signs checks for the getDowntown program. Shore also confirmed for Guenzel that it was likely that getDowntown could be housed at a newly-reconstructed Blake Transit Center, using second-floor office space.

Gunn noted that the city of Ann Arbor had sold AATA the strip of land that AATA had wanted to facilitate their desired new transit center design. John Mouat asked Shore if she felt comfortable about the longer term at the AATA, on a horizon for, say, five years. Shore noted that the AATA is subject to the same financial constraints as other organizations. She also pointed out that the AATA is looking at a structural reorganization. Shore noted that getDowntown serves as a bridge between the DDA, AATA and the city of Ann Arbor.

Guenzel confirmed with Shore that getDowntown’s advisory board, along with the city of Ann Arbor, is fine with the proposed continuation of getDowntown as part of the AATA. Guenzel got clarification that the DDA board would not be required to take a particular action – the conversation was an informational point.

getDowntown: Committee Discussion – go!pass Status

Shore then gave the committee an update on the go!pass pricing structure. She noted that the price of the pass to employers has been increased from $5 to $10 for an entire year. Shore said negative feedback has been minimal – employers are still getting a year’s worth of transportation for $10. She’s not seeing a dip in participation.

Shore noted that the DDA is a huge reason the go!pass exists, because the rides used under the go!pass system are paid out of revenue from the public parking system – which the DDA manages for the city. [Additional Chronicle reporting on the go!pass price increase from $5 to $10 for employers, and the reduction in the price per ride charged by the AATA: "AATA Reduces Price for go!pass Rides"]

Shore noted that August 2011 had been a record-breaking month. More rides were taken in that month than in the history of the program, including the first year, when go!passes were distributed free. Guenzel scrutinized a point on the handout that spelled out a policy on part-time and volunteer eligibility for go!passes. He wanted to know if that was new. Shore said it’s always existed as part of the policy, but it’s been slightly revised. She said that in order for a position to be considered a contribution to downtown, it made sense to require at least two days a week of work.

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The change authorized by the board might go unnoticed for holders of the passes, who do not pay fares to board the bus, but will include an increase from $5 to $10 for the annual fee paid by employers. That’s an increase that will be implemented by the getDowntown program, which administers the go!pass program. However, in the action taken on Aug. 24, the AATA is actually lowering the price per go!pass ride.

Here’s why. Holders of the go!pass card can board the bus without paying a fare, and there are no limits on the number of rides that can be taken with the card. The cost of such rides is funded in small part by the $5/card fee paid by employers, but in largest part by revenues from the city’s public parking system provided through the Ann Arbor Downtown Development Authority. At its June 2, 2010 meeting, the DDA authorized three years worth of funding for the go!pass program. For the second two fiscal years of that funding, approval amounted to $438,565 (FY 2012) and  $475,571 (FY 2013).

The number of rides taken using the go!pass has increased each year for the last decade, but has jumped significantly during the last year. [.jpg graph of go!pass ridership] In the past, the AATA has priced go!pass rides in a way that matches the revenue per go!pass ride to the amount that bus riders would pay if they paid the full fare under a regular 30-day pass – the cheapest full-fare option. So, as go!pass ridership has increased, the total amount charged by the AATA for the rides has also increased.

In the past, the DDA has increased its level of support to match what the AATA has charged. As the DDA is under increasing financial pressure due to the new public parking system management contract recently signed with the city of Ann Arbor, as well as a possible need to return excess tax increment finance (TIF) that was collected, it’s not anticipated that the DDA will be able to increase the amount it contributes to the go!pass program.

Given the levels of funding now pledged by the DDA, the price that employers would need to be charged per go!pass per year would be $26 – if the same policy is maintained of charging for go!pass rides so that their cost matches what the cheapest full-fare option would be.

In recent presentations to the DDA, Nancy Shore, the director of the getDowntown program, has recommended an increase from $5 to $10, not to $26. The advisory board of getDowntown has approved the increase to $10.

The action taken by the AATA board on Aug. 24 essentially sets the charge for go!pass rides at a flat rate – equal to the DDA’s current level of pledged support, plus an estimate that the total employer contribution (at $10/pass/year) would be $71,000 per year, based on the roughly 7,100 go!passes sold to employers so far this year. That is, the price charged for go!pass rides for the next two fiscal years will be $509,565 and $546,571, respectively – independently of the number of rides taken by go!pass holders.

The board’s action translates to a decision to accept a $16/pass/year shortfall in revenues from go!pass rides, compared to what the previous pricing policy has been, or roughly $113,600 (16*7,100).

This brief was filed from the downtown location of the Ann Arbor District Library, where the AATA board holds its meetings. A more detailed report will follow: [link]

To honor her past year of service as chair of the Ann Arbor Downtown Development Authority board, Joan Lowenstein was presented with a plastic bag full of gravel. (That was only part of the token of appreciation.) To Lowenstein's left is Gary Boren, who was elected chair for the next year. (Photos by the writer.)

But during the meeting, parking issues were a focus, as they usually are.

First, board member Roger Hewitt reported to the board that additional data on usage of the city’s public parking system will now be available from Republic Parking. The DDA manages the city’s public parking system under a contract with the city of Ann Arbor – the DDA subcontracts out the day-to-day operations to Republic Parking. The new kind of data measures the number of total parking hours used by parkers against the total number of parking hours that are available in the system. Based on that measure, the parking system has seen a 1.72% increase in usage over the first five months of 2011, compared with the same five months of 2010.

Second, one of the major allocations of public parking revenue the DDA makes is to the getDowntown program, a partnership among the DDA, the Ann Arbor Transportation Authority and the city of Ann Arbor. As part of a three-year funding plan for the getDowntown program approved in June 2010 for fiscal years 2011-13, the program will receive roughly $500,000 from the DDA for FY 2012 and FY 2013, the bulk of which is to subsidize the cost of rides for holders of a go!pass. The go!pass is a card that allows employees of downtown businesses to board AATA buses on an unlimited basis without paying a fare.

The getDowntown program employs two people, including director Nancy Shore. At Wednesday’s meeting, Shore gave the full board the same presentation she’d given the board’s transportation committee earlier in the month. Part of the board discussion involved which of the three funding partners – the DDA, the city of Ann Arbor or the AATA – would employ the two getDowntown staffers in the future. One possibility, which based on Wednesday’s meeting seemed likely, would be for the DDA to add the two getDowntown staffers to its administrative payroll.

At its annual meeting, convened just after the monthly board meeting, the board elected new officers for the coming year, all with unanimous consent: Gary Boren, chair; Bob Guenzel, vice chair; Keith Orr, secretary; and Roger Hewitt, treasurer.

In recognition of her service, outgoing chair Joan Lowenstein was presented with a token of appreciation by the DDA staff: a plastic bag of gravel, and a necklace featuring a lump of gravel as its centerpiece.

The connection to gravel in Lowenstein’s gift was the underground parking structure on Fifth Avenue, which is currently under construction. The board got its regular update on the status of that project, as well as commentary from the owners of two immediately adjacent restaurants – Jerusalem Garden and Earthen Jar – which have seen their business drop by 30-50% during the construction. 

Underground Parking Garage

The ongoing construction on the underground parking garage on Fifth Avenue was a highlight during public commentary. The project also received its usual update out of the bricks and money committee.

Underground Parking Garage: Impact of  Construction on Businesses

Owners of two restaurants along Fifth Avenue, immediately north of the construction site of the new underground parking structure, addressed the board. Ali Ramlawi of Jerusalem Garden and Pushpinder Sethi from Earthen Jar expressed their frustration about the impact the project has had on their businesses.

Ali Ramlawi of Jerusalem Garden (left) and Pushpinder Sethi of Earthen Jar (right) listened to the rest of the board meeting after taking their turns during public commentary.

Ramlawi introduced himself as a resident of Ward 5 and reminded them that he’d addressed the DDA board previously [in October 2010]. He said that the four-minute time allotted for public commentary goes by fast, so he wanted to add to his previous comments.

He noted that his restaurant is located right next door to the construction site and the construction [which broke ground in late September 2009] had been going on for almost two years. He was not coming to the board for a handout, he said. He simply wanted to state a case. He said he did not feel that the DDA board fully considered the ramifications of its decisions on people and businesses.

Fifth Avenue has been closed for nearly a year and would be closed for another six months. The arrangement had not been fully explained at the outset, he said. [Ramlawi was one of the parties to a lawsuit over the parking garage, which was ultimately settled.] He’d been doing business for 18 years in Ann Arbor and the last 12 months have been the hardest. He reported that his customers often ask him about the construction: What is going on? And their followup question is this: What is the city doing for you? People are amazed, he said, that the answer is: nothing.

Ramlawi said he’s been told that it’s like any other project, like a bridge replacement. But it’s not the same, he said. As the DDA considers the future use of other city lots, he said, the DDA needs to take into account the impact of future projects on small businesses. His business has been down 30% for over a year. He pointed to other businesses besides his own in the immediate vicinity, like the Earthen Jar, Herb David’s Guitar Studio, and the Bead Gallery, and ventured that the community might lose one of them.

Ramlawi said when he hears about tax abatements being offered to companies to attract or retain them, he thinks it’s “fine and dandy” but also feels like the city needs to take care of mom-and-pop businesses – like Drake’s Sandwich Shop or The Del Rio. Those businesses disappeared and nobody replaced them. His own utilities – water, phone system, electricity – have been cut off at times due to the project and that has driven up the cost of doing business. He told the board he was upset with the “inaction of the DDA.”

Sethi said he didn’t need to repeat what Ramlawi had said. But he added that his own business was down more like 50% – it’s located immediately next to the project. The slump in business is not due to the recession, he said – that was 2008-2010. He said that the city should help by providing something like tax breaks.

Underground Parking Garage: Construction Update

John Splitt gave the update out of the bricks and money committee on the underground parking garage, which included the fact that mechanical work is starting on the dogleg of the east part of the structure. Some finishing work is also starting on the dogleg, and the top 2-3 feet of the earth retention system is being removed, as it’s no longer needed. In the middle portion, deck slabs are being poured and the structure is almost up to ground level on those pours.

For the third section of the garage, nearest to Fifth Avenue, the final foundation pours have been completed, Splitt said, with two pours of 2,200 cubic yards of concrete. That work has allowed Christman Company  – the contractor for the underground parking garage – to turn off the dewatering system.

The northeast corner of Liberty and Fifth as concrete work progresses on the Fifth & Division streetscape project.

John Mouat said that with the “shell” now done, he wondered if Christman is now looking at being able to “advance the schedule.” Splitt said that he meets weekly for breakfast with the Christman team, and he’s constantly trying to push the schedule. So it’s a weekly if not daily point of emphasis, he said. Obviously, he said, concrete only cures so fast.

Splitt also gave the report on the Fifth and Division streetscape improvement project. Eastlund Concrete Construction has done some work on Division Street, pouring some crosswalks. They are still doing some brick work too.

Work is progressing on the 200 block of Fifth Avenue – Eastlund was pouring curbs on the east side, and after the art fairs, which runs from July 20-23, they would move to the west side of street.

That will finish Eastlund’s part of the project, Splitt said. Christman will do the streetscape work on the 300 block of Fifth Avenue, after the underground parking garage – which is on that block – has finished construction.

Parking Revenue: go!pass Program

The DDA allocates revenue from the public parking system to support various projects. Some of those revenues support the go!pass program, which is administered by the getDowntown program.

Nancy Shore, director of the getDowntown program, was invited to give the same presentation to the full board on Wednesday that she’d made to the transportation committee at its June 8 meeting. The getDowntown program employs two people, including Shore.

By way of basic background, the getDowntown program is a partnership among the DDA, the Ann Arbor Transportation Authority and the city of Ann Arbor. As part of a three-year funding plan for the getDowntown program approved in June 2010 for fiscal years 2011-13, the program will receive roughly $500,000 from the DDA for FY 2012 and FY 2013, the bulk of which is to subsidize the cost of rides for holders of a go!pass.

The go!pass is a card that allows employees of downtown businesses to board AATA buses on an unlimited basis without paying a fare on boarding. Their rides are paid by the DDA out of public parking revenue it receives under its contract with the city of Ann Arbor for managing the public parking system.

By way of technical background, since early February 2009, the AATA has used fare boxes on its buses that allow for riders to swipe different kinds of cards as a way to validate their rides. Two kinds of cards that are now swiped are University of Michigan M-Cards and go!pass cards. Before the new fare boxes were installed, AATA drivers would record those rides with a button press, so some data was being collected about the total number of rides taken by University of Michigan affiliates or by holders of go!passes.

It’s possible, for example, to look at overall ridership on the AATA regular bus system as compared with the ridership of those two affiliate programs dating back at least to 2004. In Chart 1, the top group of lines are overall ridership numbers, the middle band are UM affiliate ridership numbers and the lower band reflect go!pass numbers.

Chart 1. Overall ridership on AATA buses, broken down by UM and go!pass rides by year. (Image links to higher resolution file.)

Within each band in Chart 1, separate lines correspond to different years. Generally, ridership across all categories has gone up year over year.

Statistical highlights of Shore’s presentation included the continuing increase in the number of go!passes purchased by downtown employers for their employees, and the number of employers who participate in the program. In 2001-02, 3,913 go!passes were purchased by a total of 239 companies. That compares to 7,157 passes purchased by 506 companies so far this year.

The total number of rides also continues to climb each year, as Chart 2 shows.

Chart 2. go!pass rides by month, charted year by year. (Image links to higher resolution image.)

In the course of the board discussion after Shore’s presentation, board member Newcombe Clark drew out the fact that employers must purchase go!passes for all of their full-time employees in order to participate. The cost to the employer per pass is currently only $5, but Shore is recommending that it be increased to $10 next year.

Clark also drew out the fact that based on the new swipable cards, it’s possible to track the usage of individual cards, not just count the rides taken.

Keith Orr wanted to know if there are people who have go!passes who haven’t used them – yes, said Shore. Summarizing Shore’s data in ballpark form, Russ Collins said it looks like half the people who are given cards by their employers don’t use them at all, and about one-third use them actively. He felt that the cards warranted a larger charge to the consumer – those who use it clearly see the value, he said, and even if you quadrupled the price to $20, it would still be a great benefit to them.

[The cost charged to employers for purchasing the cards, even though many employees do not use the cards, still does not nearly cover the cost of the rides taken. That's why the DDA will be subsidizing the go!pass rides with payments to the AATA of $438,565 for FY 2012 and for $475,571 in FY 2013.]

At Collins’ suggestion to hike the per card cost to employers, Clark hesitated, noting the requirement that cards must be purchased for all full-time employees. That might discourage an employer who had a large number of employees: “I don’t want to knock an employer out who couldn’t afford it,” Clark said.

Orr noted that part of the success of the program is the requirement that you have to buy a card for all full-time employees. In the course of her presentation, Shore explained that the focus on employees [as opposed to other visitors to the downtown] was driven by the fact that employees have the most consistent patterns and when that pattern can be changed, then it changes consistently.

Another highlight of Shore’s presentation was the breakdown by company type for card usage. In terms of number of rides taken, restaurant employees took 46% of the go!pass rides, government workers took 9% of rides and retail employees took 8% of rides.

go!pass usage by industry (Image links to higher resolution file)

Board members were complimentary of the program and of Shore’s work. Mayor John Hieftje noted that the program had won an international award a few years ago and he encouraged Shore to apply for that award again. He pointed to the connection to the city’s affordable housing goals. Not owning a car puts $500 per month back into someone’s budget that they can spend on something else, he said.

Leah Gunn said that since Shore had taken over the getDowntown program, it had really started to soar. Joan Lowenstein said the program was good evidence of how the DDA works in partnership with other organizations.

Roger Hewitt noted that out of 7,000 passes, about 2,400 are used on a regular basis. He wondered if it was possible to find out what percentage of those cardholders who are heavy users also own cars. Shore indicated that she would work on getting that information.

• Google Spreadsheet for data used to display overall AATA ridership broken down by UM affiliates, go!pass rides, by year
• Google Spreadsheet for data used to display breakdown of go!pass rides by weekday
• Google Spreadsheet for data used to display breakdown of go!pass rides by month, charted by year

Parking Revenues: Status of getDowntown Staff

As part of his report from the transportation committee, John Mouat noted that the getDowntown program needs to “find a home.” That’s still an ongoing conversation, he said.

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

At the Oct. 7, 2009 meeting, Mouat had mentioned the issue as part of his regular monthly committee report to the board. And it came up again at the board’s May 7, 2010 meeting.

A question from DDA board member Leah Gunn clarified that the issue being considered is not the physical location of getDowntown’s offices, but rather the administrative payroll issue: Which organization will formally employ the getDowntown program’s two staff?

Mouat explained that currently the two staff are employees of the AATA. The transportation committee is looking at the possibility of transferring the responsibility to the DDA. Mouat characterized it as a “nice fit” from a funding perspective – both getDowntown and the DDA have a focus on the downtown. The mission of getDowntown is also connected to the planned implementation of transportation demand management in the parking system, Mouat said.

Another advantage is that AATA’s contribution via a federal Congestion Mitigation Air Quality (CMAQ) grant is administratively easier, if getDowntown is separate from the AATA, Mouat said.

The impact on the DDA, Mouat said, would be that deputy DDA director Joe Morehouse would do the books, executive director Susan Pollay would do the employee evaluations, and the two staff would become employees of the DDA.

Shore indicated that there was no hard and fast deadline, but it would be preferable to have a decision made by year’s end. Bob Guenzel asked what the position of the getDowntown funding partners is on the question of merging getDowntown with the DDA. Citing the views of the getDowntown board, Shore said that everybody is comfortable with it.

Regular Parking Report

Roger Hewitt summarized the regular monthly parking report for his board colleagues.

Total public parking revenues for May 2011 were $1,218,442, based on permit holder fees plus fees paid by 170,471 hourly parkers in structures. That’s an increase from May 2010, which had $1,145,740 in total revenues and 169,466 hourly parkers.

Percentage-wise that’s a 6.35% increase in revenue and an 0.59% increase in the number of hourly parkers, with a total system parking space inventory of 19 additional spaces: 7,149 in May 2011 compared with 7,130 in May 2010.

The board has recognized for some time that this kind of measure for parking demand is somewhat coarse. The number of hourly parkers gives some insight, as does the total revenue, but these data do not provide a direct measure of how much of the system’s capacity is being used.

At the DDA board’s bricks and money committee meeting on Wednesday, June 29, Joe Morehouse – deputy director of the DDA – presented committee members with data showing the percentage of total parking hours sold for parking structures, with 100% corresponding to the (practically impossible) scenario of every spot in every space filled with a car 24/6 (structures are free on Sunday) and no time lost when one car pulls out and another pulls in. Like the standard parking report, the comparison for May 2011 against May 2010 using that metric also showed an increase in demand: 33.22% in May 2010 compared to 34.94% in May 2011. [Ann Arbor public parking efficiency chart]

At Wednesday’s board meeting, Hewitt said that the DDA spent a lot of effort and resources to upgrade software and IT with new equipment, which can now capture enormous amount of data. The board had asked Morehouse and Republic Parking staff to get an idea of total occupancy – the total “car hours.” To generate the percentages, they’d taken as the denominator all the spaces in attended structures and lots for the entire time they charge for spaces. Hewitt said the data was currently only for about a year and a half, but they were working on getting more. At the June 29 committee meeting, Hewitt had described part of the problem as related to a corrupted database.

By way of some additional background, parking data and its accessibility to the public has a contentious recent history. In early 2009, a demonstration application was developed by independent programmers, to use real-time parking space availability provided on the DDA’s website to develop a software application where a phone number could be called and the caller would hear an automated voice give the number of spaces available in a given structure. That led, for a time, to the blocking of access to the DDA website by automated applications, a move that was met with strenuous objections by the local IT community, some members of which attended DDA board meetings to express their concerns.

Objections to the blocking of the parking usage data were amplified by the fact that around that time, the city council was considering approval of bonds for the construction of a new 640-space underground parking garage. The council approved the bonds and the garage is currently under construction along Fifth Avenue, with completion now anticipated in early 2012.

Another part of the context of that time period was the DDA’s recommended series of parking rate increases, which were in part due to the construction of the new garage.

At Wednesday’s board meeting, Hewitt noted that the next parking rate increase is due to take effect Sept. 1, 2011. He characterized it as being in the range of 5%. [For metered spaces, it's an increase from $1.10 to $1.20 per hour. The hourly rate for parking in a structure will be increased from $1.30 to $1.40] That was part of a series of annual increases approved in connection with the construction of the underground parking structure, he said.

In the fall of 2011, Hewitt noted, the DDA will need to make a presentation to the city council on parking rates and will need to have some idea of what they plan to do with parking rates a year from now.

The Varsity at Ann Arbor

Ray Detter reported to the board with a summary of the previous night’s meeting of the Downtown Area Citizens’ Advisory Council. Board chair Joan Lowenstein invited Detter to the podium by teasing him to spiff up, because the cameras were back on. [The videotaping system had a glitch at the start of the meeting and were not recording, but they were restored to service.]

Detter said that the advisory council had devoted their entire discussion to The Varsity at Ann Arbor, a proposed residential project planned for 425 E. Washington St., next to the 411 Lofts building. [The site is currently the location of an office building, which formerly housed the Prescription Shop. The Varsity is planned to be a 13-story apartment building with 173 units that would house 418 people. It would include 77 parking spaces.]

Detter said the advisory council felt the project would be a learning experience – with respect to a newly established design review board. Detter noted that in addition to the developer’s meeting with the design review board, which had already taken place, a second required meeting – a citizen engagement meeting – would be held on July 7.

Detter said the design review board had provided feedback and that the advisory council agrees with its suggestions. But the project has a long way to go if it’s going to voluntarily comply with the design guidelines, he said. The building as proposed now is 143 feet tall now, but he would encourage the developer to go higher, if necessary, if it would allow the building to step back more from the property lines.

Detter told the DDA board that his group supported a project now under construction, Zaragon West, because the developer considered the design guidelines as they were emerging, but before they were given final approval by the city council. Fortunately, Detter said, The Varsity’s developer had hired a local architect [Bradley Moore]. The first principle of the design guidelines, Detter said, was to identify and reinforce characteristics of adjacent sites. But The Varsity doesn’t doesn’t do that, he contended. There was no consideration to east or west where two smaller historic properties are located.

Detter also noted the two entrances to parking garages under the building – one on Huron Street and the other off Washington Street. Both of them pose problems for pedestrians and traffic, he said. One possibility is combine them so that only one entrance would be used. The east side of the building, which faces the First Baptist Church, is difficult, he said. One person had described it as a “slab,” Detter said, and another as a “tsunami of uninteresting brick.” That wall could be improved, he said, by reshaping it. The developer has started consulting with stakeholders, like the First Baptist Church, and as a result has added a walkway. Now it’s only five feet wide, but Detter hoped it could be made wider.

Lowenstein indicated she was glad the city council had reduced the proposed design board review fee from $1,000 to $500.

Communications, Committee Reports

In addition to Detter’s report from the citizens’ advisory council, the board’s meeting included the usual range of reports from its standing committees, as well as public commentary.

Comm/Comm: Retail Recruitment

Joan Lowenstein reported for the economic development committee that they’d explored the possibility of a role for the DDA in retail recruitment by inviting Ed Shaffran [a former DDA board member and head of Shaffran Companies Ltd., which owns several downtown Ann Arbor properties] and Mike Giraud of Swisher Commercial.

Lowenstein reported that the committee learned the DDA has done a lot already: infrastructure improvements have an impact on the ability to recruit retail. However, as far as going out and helping with recruitment directly, she said, they’d heard from Shaffran and Giraud that there’s not a lot you can do without “stepping on toes.” Knowledgeable brokers are already involved, and offering incentives can be slippery slope, she reported.

Where the DDA could help is with the promotion of the downtown and getting Ann Arbor onto the broker map nationally. Shaffran and Giraud also mentioned the need for larger floorplates – something the committee had also heard from representatives of Ann Arbor SPARK, the local economic development agency. Another theme the committee had heard mentioned before, Lowenstein said, was that regulatory processes are an impediment for developers to get projects approved.

Lowenstein mentioned that the DDA’s annual report is forthcoming for the current year. She characterized it as a statistical analysis and also a promotional document for the downtown.

Comm/Comm: Energy Grants

Russ Collins reported out for the partnerships committee on the DDA’s energy saving grant program. Through the program, downtown business owners can get an energy audit paid for, with matching funds for any recommended improvements that are actually implemented, up to a cap. These steps of the program – audit and implementation – are referred to as Phase 1 and Phase 2 by the DDA. In the past, the per-project cap for Phase 2 has been $20,000 per project. But Collins said that cap has now been reduced to $5,000.

The total project budget for the coming year will be $100,000, compared with $200,000 in previous years, Collins said. A total of $20,000 will be for Phase 1 assessments – they’ll target larger buildings as a part of an attempt to coordinate with the city’s PACE program, which provides a funding mechanism for making energy improvements. The remaining $80,000 will be focused on improvements that are directed toward smaller projects, he said.

Comm/Comm: Future Use of City-Owned Lots

Reporting out from the partnerships committee, Russ Collins said the majority of the committee’s last meeting had been spent addressing how to meet the city council’s directive to establish a public process to figure out what to do with some of the city-owned parcels in the downtown: the Library Lot, the former YMCA Lot, Palio’s Lot and Kline’s Lot.

Collins summarized the contributions of several guests at the partnerships committee meeting, including local developer Peter Allen, real estate developer Albert Berriz, AATA board chair Jesse Bernstein, and two University of Michigan faculty members in the college of architecture and urban design – Doug Kelbaugh and Kit McCullough.

Collins’ summary was consistent with The Chronicle’s report from that meeting: “DDA Continues Planning Prep.”

At that meeting, Kelbaugh and McCullough pitched their services to lead the public engagement process that would begin this fall – they were looking for a decision from the DDA about that in July or August. But Collins said the committee had decided to take a step back.

The upcoming partnerships committee meeting on July 13 will be devoted exclusively to how to move forward with that process. Collins noted that Sandi Smith, who co-chairs the committee with Collins and who was absent from Wednesday’s board meeting, is unavailable. Collins added that he would be out of town for the July 13 meeting. However, board member John Mouat, who is an architect, would be there to run the meeting, Collins said.

Comm/Comm: Fruit, Vegetable Bike Racks

As part of his report from the transportation committee, John Mouat said that carrot, apple and cherry bike racks were currently being painted to get them ready for installation at the Farmers Market.

Comm/Comm: LED Lighting Company

Ted Williams and Jaspreet Sawhney, with Falcon Innovations Inc., attended the meeting and addressed the board by way of introducing their company to the board. Sawhney, alluding to Pushpinder Sethi’s turn at the podium just before his own, said he was amazed that two people wearing turbans were addressing the DDA that day.

Jaspreet Sawhney of Falcon Innovations talks with Susan Pollay, the DDA's executive director.

Falcon is an LED lighting manufacturer. They had decided to come address the board when mayor John Hieftje stopped by their booth at the recent Green Fair held on Main Street downtown. Sawhney said that he’d previously met Susan Pollay, executive director of the DDA, and Dave Konkle, former energy coordinator with the city of Ann Arbor and now consultant with the DDA. Sawhney demonstrated two different products for the board. He told them that the firm’s manufacturing facility is not in Michigan but they are looking to change that.

Board member Russ Collins wanted to know if the lights were dimmable – yes. Board member Newcombe Clark pointed out that Falcon’s offices are located on Main Street, above Conor O’Neill’s.

Annual Meeting: Officer Elections

The main task for the DDA board at its annual meeting was to elect its officers for the next year. Standard practice is for the current vice chair to be elected chair, with the expectation that whoever is elected vice chair will serve as chair the following year.

Gary Boren, newly elected chair of the DDA board.

Roger Hewitt nominated current vice chair Gary Boren to serve as chair.

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

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

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

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

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

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

With little further discussion, the remaining officers were nominated and voted on. Leah Gunn, who serves on the Washtenaw County board of commissioners, nominated former Washtenaw County administrator Bob Guenzel as vice chair. That vote was unanimous. John Splitt nominated Keith Orr as secretary, and that vote, too, was unanimous. Splitt then nominated Roger Hewitt to stay on as treasurer.

In sum, the officer election featured none of the drama of two years ago, when the board initially could not find a consensus about who the next chair would be.

Outcome: All officers were elected by unanimous voice votes: chair, Gary Boren; vice chair, Bob Guenzel; secretary, Keith Orr; treasurer, Roger Hewitt.

Annual Meeting: Committee Mergers

At last year’s annual meeting, the DDA merged its capital improvements and operations committee into a single “bricks and money” committee. At that time, the DDA also had two other committees: the partnerships committee and the transportation committee. The partnerships committee handles issues related to the collaboration of the DDA with other entities like the city council, which appoints two of its members to the DDA’s partnerships committee. Currently those council members are Tony Derezinski (Ward 2) and Margie Teall (Ward 4).

The transportation committee, formed two years ago, is a relatively new committee. At last year’s annual meeting, the board decided to add a new committee – the economic development and communications committee.

At Wednesday’s annual meeting, John Splitt led off discussion of the constitution of committees by suggesting that transportation be merged with the bricks and money committee. He reasoned that transportation would be dealing with issues like go!passes and with transportation demand management, which are both ultimately related to parking issues –the domain of the bricks and money committee. He suggested the merger based on overlapping subject matter.

John Mouat, who chairs the transportation committee, agreed that it was a good suggestion. The general consensus was that a new name for the committee was needed. Russ Collins suggested: “Let’s not find a name now, because that’s how we came up with ‘bricks and money.’” Keith Orr offered that the first task of the newly constituted committee should be to find a new name.

Outcome: The board voted unanimously to merge the transportation committee with the bricks and money committee.

Mayor John Hieftje then suggested combining the partnerships with the economic development and communications committee. Leah Gunn supported that idea. Newcombe Clark cautioned that that intent of having a communications committee was to recognize that communications is not getting done effectively. It had been as a deficiency, he said, so he didn’t want to fold the subject matter back into another committee, just because it was a new committee.

It was briefly discussed that the motion to merge the committees formally needed a second before Clark could weigh in. With the motion officially seconded, Russ Collins quipped that, even though Clark’s comments were “totally rogue,” having been made before the motion received a second, he agreed with Clark.

Splitt agreed with the point made by Clark and Collins, but noted that participation was a bit lacking. Hieftje stressed that the intention was not that the issues would fall away. The question was whether communications needed a free-standing committee. Joan Lowenstein allowed that there has been sparse attendance at the committee’s meetings and it would be nice to bring everyone together.

Mouat asked for executive director Susan Pollay’s thoughts. Pollay agreed with everything the board was saying. She noted that the board members are volunteers. Having more people attend committee meetings is better, she said, but they can’t drop communications as a topic of concern, even if it’s not a separate committee. Keith Orr indicated he would like to leave it as is for the time being to see if reducing the number of committees from four to three will help improve attendance.

Outcome: The board voted to merge the partnerships committee with the economic development and communications committee, with dissent from Clark, Collins and Orr.

Annual Meeting: Tokens of Appreciation

Susan Pollay, executive director of the DDA, presented outgoing board chair Joan Lowenstein with a token of appreciation.

Joan Lowenstein, outgoing chair of the DDA board, admires the token of appreciation she received from the DDA staff: a necklace featuring a construction pit piece of gravel.

Last year, outgoing chair John Splitt had been presented with a plaque that was fashioned from a piece of the earth retention system lagging. This year Lowenstein’s gift also consisted of artifacts from the construction site of the Fifth Avenue underground parking garage: a plastic bag of gravel. The serious part of the gift was a custom piece of jewelry crafted by Schlanderer & Sons and featuring a piece of construction site gravel in a sterling silver setting.

[According the staff of Schlanderer & Sons, it was one of the more unusual requests they've ever received, and they completed the piece with a budget of less than $200.]

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

Absent: Sandi Smith.

Next board meeting: Noon on Wednesday, Sept. 7, 2011, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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