Door to the Ann Arbor city council chamber.

The council will be giving final consideration to an ordinance change that expands the definition of “sidewalk” – to include any sidewalks the city has formally accepted for public use. The change has implications for owners of property adjacent to several “cross-lot paths” in the city – which are on the meeting agenda for acceptance for public use.

One consequence of the definition change is that those property owners will not be responsible for the repair of those paths – because the paths will be eligible for sidewalk millage repair funds. But the adjacent property owners would become responsible for clearing snow from the paths.

Also related to land use on the meeting agenda are rezoning requests associated with two proposed developments. Up for an initial vote is the rezoning from PUD (planned unit development) to D2 (downtown interface) for the parcels on North Main and Fourth Avenue where Kerrytown Place is planned. The 18-unit townhouse development is much smaller than The Gallery, for which the PUD zoning had originally been approved.

Also up for initial consideration is a rezoning request for 2271 S. State St., where the owner would like to be able to sell automobiles. The planning commission recommended denial of that request, in part because that land use was not felt to be consistent with the draft South State Street corridor plan. At its July 1 meeting, the council will also be asked to adopt that corridor plan.

The re-establishment of a citizens advisory committee on changes to R4C zoning in the city also appears on the meeting agenda. The origins of that committee date back to 2009. The reconstitution of the 12-member committee comes as the planning commission has recommended changes to R4C zoning that the council will be weighing – to decide if ordinance language should be drafted to reflect those changes.

Another committee with its origins in 2009 is set to be reconstituted at the council’s July 1 meeting, but it’s not related to land use. The council will be asked to re-establish a “mutually beneficial” committee to work through recommendations to changes in the city ordinance that regulates the Ann Arbor Downtown Development Authority’s tax increment finance (TIF) capture. The council has already given initial approval to some ordinance changes. Committee members will be working with their DDA counterparts with a two-month window of time – because the council has postponed final action on DDA ordinance changes until Sept. 3.

The council will also be asked to take an initial vote on a video privacy ordinance, having postponed that initial vote several times previously.

And finally, Ward 2 will not have a city council primary election a month from now, but it appears on the agenda in connection with polling places. The Precinct 2-8 polling location will be changed for all future elections to the First United Methodist Church on Green Road.

Details of other meeting agenda items are available on the city’s Legistar system. Readers can also follow the live meeting proceedings on Channel 16, streamed online by Community Television Network.

The Chronicle will be filing live updates from city council chambers during the meeting, published in this article “below the fold.” The meeting is scheduled to start at 7 p.m.

6:55 p.m. Pre-meeting activity. The scheduled meeting start is 7 p.m. Most evenings the actual starting time is between 7:10 p.m. and 7:15 p.m. Currently in chambers are mayor John Hieftje, city administrator Steve Powers, city attorney Stephen Postema. Marcia Higgins (Ward 4) has just arrived. Audience is a bit sparse so far. Less than a dozen people are here.

7:06 p.m. Margie Teall (Ward 4) and Sally Petersen (Ward 2) are the only councilmembers not yet here. Petersen will definitely not be here. Advocates for the video privacy ordinance have arrived. About a dozen or so. They barely outnumber the large box of Washtenaw Dairy donuts they’ve brought to share. “This is not going to be good for my beach body this summer, but it’s delightful for my tastebuds.”

7:07 p.m. Pledge of allegiance, moment of silence and the roll call of council. Petersen and Teall are absent. We’re under way.

7:07 p.m. Public commentary. This portion of the meeting offers 10 three-minute slots that can be reserved in advance. Preference is given to speakers who want to address the council on an agenda item. [Public commentary general time, with no sign-up required in advance, is offered at the end of the meeting.]

A pending rule change to be considered at tonight’s meeting would limit speaking time to two minutes. Another pending rule change would address “frequent flyers,” by only allowing people to reserve time at the start of the meeting, if they did not speak during reserved time at the previous council meeting. Only six of the 10 slots have been reserved tonight.

Three people are signed up to talk about the council rules changes on the agenda tonight: James D’Amour, Michael Benson and Thomas Partridge. Partridge is also signed up to talk about the video privacy ordinance, as are three other people: Will Leaf, Leslie Stambaugh and Kent Weichmann. Stambaugh is chair of the city’s human rights commission. The video privacy ordinance is up for its initial consideration after having been postponed several times. The ordinance would restrict the ability of local law enforcement officials set up un-staffed cameras for public surveillance.

7:11 p.m. James D’Amour is up first. [As former city planning commissioner, D'Amour has some experience with public commentary from the other side of the microphone.] Some of the changes, he says, are pretty good. The addition of a public commentary period during work sessions is a good step, he says. But the time reductions are a step backward, he says. If hundreds of people show up to speak, then the council has done something wrong. The game they need to play is to be more accessible, not less accessible, he says. There’s been a change in the dynamic of local politics, and it’s less collegial, he says.

7:14 p.m. Thomas Partridge reminds the council that he has run for election to the state legislature in the past. He accuses Hieftje of seeking to suppress public access to the council. Instead of diminishing public participation time, it should be increased, he says.

7:17 p.m. Will Leaf is now addressing the council on the video privacy ordinance. [His involvement with the topic dates back several years. He led Students Against Surveillance at the University of Michigan.] He rejects the idea that the ordinance would tie the hands of the police. Leaf is citing news media articles on the topic. They include a June 19, 2013 LA Times article about Muslims suing the New York City Police Department over surveillance of congregants at mosques that has included video surveillance.

Leaf is also citing a Oct. 25, 2010 article in The Guardian about the dismantling of video surveillance cameras in Birmingham, England, and a Jan. 13, 2006 BBC News article about CCTV camera operators who pointed cameras into a woman’s apartment and observed her in a state of undress. Leaf says that if public surveillance cameras are installed, then they should be regulated. He points out that the ordinance wouldn’t affect any cameras currently in place. He gets a round of applause from the now roughly two dozen people who are here in support of the ordinance.

7:20 p.m. Leslie Stambaugh agrees with Leaf. She points out that the ordinance originated with a citizens group. Why can’t we just trust the police to adopt this practice when they need it? she asks. It seems modern and effective. But video surveillance hasn’t been shown to reduce or solve crime, she contends. For nuisance crimes, she allows it might have some benefit. Lansing installed 11 cameras, which wound up costing $2.3 million. The human rights commission didn’t like the ordinance surveillance she said, and the ACLU doesn’t like it. If the city wants to use video cameras for surveillance, it needs to be regulated, she says.

7:24 p.m. Michael Benson is now addressing the council on the topic of council rules. He points out that if he had a handout for the clerk, that would be attached to the minutes. He encourages the council to advertise that fact. He suggests that the council pay attention to their own question time as well. He suggests a way of addressing the problem of an agenda item clogging up the reserved commentary time.

7:25 p.m. Kent Weichmann weighs in for the video privacy ordinance. Benson had weighed in against it at the conclusion of his remarks.

7:25 p.m. Council communications. This is the first of three slots on the agenda for council communications. It’s a time when councilmembers can report out from boards, commissions and task forces on which they serve. They can also alert their colleagues to proposals they might be bringing forward in the near future.

7:31 p.m. Mike Anglin (Ward 5) says he wants the dialogue on safe streets to continue. People who live on all kinds of streets should be listened to, he says. He wants traffic directed away from residential streets that are not designed for that kind of traffic.

Marcia Higgins (Ward 4) reminds the public about the July 2 public art forum on the East Stadium bridges project.

Sabra Briere (Ward 1) indicates that the D1 zoning review will begin tomorrow. There will be two larger public meetings as well as smaller meetings. Jane Lumm (Ward 2) asks if a schedule has been established for the review and how it will be implemented. The executive committee of the planning commission will be interviewing potential consultants, Briere explains. Staff and commission members are felt to be too close to the process to lead a public meeting. So someone with an outside view will be used, Briere says. There’ll be A2 Open City Hall surveys or perhaps also Survey Monkey surveys. The consultant will look at those issues and move to have a public meeting in August. Briere notes that the timeline requires the work to be done at the end of September. How it relates to the Y lot, she says, she’s not sure – in response to a question from Lumm.

7:33 p.m. City administrator Steve Powers asks CFO Tom Crawford to explain what happened with the city’s website. Crawford says it was a software/hardware failure. He believes all the data is there, and will be back up by 8 a.m. on July 2. Powers gives the usual updates associated with national holidays with respect to trash pickup and the like.

7:34 p.m. Public hearings. All the public hearings are grouped together during this section of the meeting. Action on the related items comes later in the meeting. Three public hearings are on the agenda. The first hearing is on an ordinance change that will change the definition of sidewalk in the city. The second would adopt the 2009 International Fire Code as part of the city’s ordinances. And the third public hearing is on the South State Street corridor plan, which is proposed to be adopted into the city’s master plan.

7:39 p.m. PH: Sidewalks. A resident who lives next to one of the cross-lot paths addresses the council. He says they’re used by a limited number of people. He doesn’t think it’s fair to assign the responsibility for winter maintenance to those who live next to the paths. He urges the council to postpone the resolution accepting the cross-lot paths for public use.

A resident who uses a wheelchair is the next speaker. He wants to talk about a letter from the city that says he’s responsible for maintenance of a path. He says he doesn’t own that property. Every year for 47 years the city has cut the grass and maintained it. His property has a timber wall on the edge of it. The sidewalk is not for a general good, but for the entrance to a park. What the city is trying to do is shift the liability to him by calling it a sidewalk when it’s not a sidewalk. The city can’t impose an insurance liability on him for property he doesn’t own, he says. He doesn’t want to make his responsibility dependent on the passage of a millage every five years.

7:44 p.m. A resident who lives next to the walkway near Scarlett-Mitchell public schools objects to the idea that she’ll be made liable for maintenance. There’s no reason for her and her husband to take over maintenance, given that the school district is currently maintaining it. The ordinance is the easy way to go. She suggests that where there is someone already maintaining and snowplowing the path, that person or entity should be made responsible. She would not be able to shovel all the snow, she says.

A fourth resident wonders how a request for a sidewalk ordinance change comes about. There are another 28 paths beyond the 33 cross-lot paths, described in the staff memo, he points out. So the council would only be acting on half of the paths.

7:47 p.m. Thomas Partridge advocates for fairness and rejects the use of Republican Tea Party tactics in determining fees. Many residents of the county and the state are being driven out of their homes due to the unfairness of flat-rate taxes and fees, he contends, including sidewalk repair assessments.

7:51 p.m. PH: Fire Code. Thomas Partridge rises to speak to this issue. He says that councilmembers and the mayor are out of touch. He says that the councilmembers who sponsored the ordinance change should explain it in their own words. He contends that the city looks for ways to impose costs on those who can least afford it. No one else speaks at this public hearing.

7:54 p.m. PH: State Street Corridor. Local attorney Scott Munzel addresses the council on the topic of the hearing. He’s representing the property owner of 2271 S. State St., which is seeking a rezoning of the parcel to allow for automobile sales. [At its May 21, 2013 meeting, the city's planning commission had voted against a recommendation of rezoning.] Munzel points out that the proposed rezoning was consistent with the master plan, before the South State Street corridor plan was put forward. He asks the council to remember this when the council hears the rezoning request.

7:55 p.m. Council communications. Chuck Warpehoski (Ward 5) clarifies where Pilar’s Tamales is located – in Ward 5. [The business is located at 2261 W. Liberty St.] Munzel had mentioned Pilar’s in the context of the 2271 S. State St. property. Pilar’s was formerly located there.

7:59 p.m. Sabra Briere (Ward 1) says she’s going to say something nice about everyone, without there being any reason. Mike Anglin is praised for his ability to mobilize people. Jane Lumm, Christopher Taylor, and Stephen Kunselman are praised in turn. Chuck Warpehoski listens to people in a way that improves council discussion, Briere says. Marcia Higgins is described as deceptively quiet. Mayor John Hieftje is also deceptive, she says – in the way that leaders can be. His knowledge provides balance. Sally Petersen is practical and pragmatic. Margie Teall’s commitment to social justice affects everything she does, Briere says.

8:00 p.m. Lumm is thanking Briere for her remarks.

8:02 p.m. Police chief John Seto is explaining how a July 16 meeting for property owners on fire inspections will work.

8:02 p.m. Minutes and consent agenda. This is a group of items that are deemed to be routine and are voted on “all in one go.” Contracts for less than $100,000 can be placed on the consent agenda. This meeting’s consent agenda includes a contract with Tanner Industries Inc. for purchase of anhydrous ammonia, which is used in the city’s drinking water treatment process. About 25 tons of anhydrous ammonia is used per year and Tanner will provide it at $1,540 per ton for a total cost next year of $38,500.

The consent agenda also includes an item to amend the payment in lieu of taxes (PILOT) exemption for the proposed Burton Commons affordable housing development. Instead of taxes, the developer would pay the city $1. The number of units would stay the same at 80. But the council’s action would approve a new development partner, Highridge Costa Housing Partners (HCHP), and change the mix of units. Previously some units had been set aside for supportive housing services, but now they will all be targeted for people with incomes at 30-60% of the area median income (AMI).

8:02 p.m. Councilmembers can opt to select out any items for separate consideration. Kunselman pulls out the PILOT for Burton Commons for separate discussion.

8:06 p.m. Kunselman wonders what the status of the project is. Brett Lenart comes to the podium. He’s with the Washtenaw County office of community and economic development development. He describes how the project was originally conceived as a 120-unit project with permanent supportive housing. But it was reconceived at a smaller scale – 80 units. And now there is no supportive housing component. Planning manager Wendy Rampson clarifies that building permits need to be pulled before the end of the extension of a site plan, at the end of the year. But there’s no limit to the number of administrative extensions that can be granted, Rampson explains.

8:07 p.m. Outcome: The council has now approved the consent agenda.

8:07 p.m. Ordinance: Sidewalk definition. The council gave initial approval to this definition change at its June 3, 2013 meeting. The new definition of “sidewalk” would expand the existing definition to include non-motorized paths that are [emphasis added] “designed particularly for pedestrian, bicycle, or other nonmotorized travel and that is constructed (1) in the public right of way or (2) within or upon an easement or strip of land taken or accepted by the city or dedicated to and accepted by the city for public use by pedestrians, bicycles, or other nonmotorized travel, …”

A resolution later on the agenda would accept 33 cross-lot pathways for public use. The impact of the definition change would make the paths eligible to be repaired by the city using sidewalk millage funds. However, adjoining property owners would be responsible for winter snow clearing. Here’s some examples of cross-lot sidewalks near Dicken Elementary School:

Example of cross-lot sidewalk in Ann Arbor.

[.pdf of maps for all 33 cross-lot sidewalks]

8:13 p.m. Kunselman leads off by saying that he’ll vote against it. It’s not a fair way to approach the topic. If the city has been maintaining a path for 47 years, he wondered why it would stop. If a school is currently maintaining a path, then arrangements should be made to continue that. He’s voting against it.

8:14 p.m. Briere, who sponsored the ordinance change, asks assistant city attorney Abigail Elias and public services area administrator Craig Hupy to the podium. Briere says that in her own research she’d learned it wasn’t clear who owns the property. Elias says the language is different in each of the plats. Responding to Briere, Elias doesn’t answer the question of whether the ordinance change would give the city an easement or title to the land. Elias says the ordinance would give “access.” Elias hasn’t looked at the issue of who the property belongs to.

Responding to Briere, Hupy says that if the ordinance doesn’t go forward, then the city doesn’t believe it can use sidewalk millage money to repair these cross-lot paths.

8:17 p.m. Briere asks Hupy if the city thinks it’s appropriate to place the burden for winter maintenance on adjacent property owners. Hupy says the schools were not interested in making the capital improvements. Some of the winter maintenance that the schools are doing, he says, is actually done out of convenience to the school – to find a good place to turn around, for example. The burden of winter maintenance, Hupy says, is the collateral damage associated with the city’s use of sidewalk millage funds for the capital repairs. Briere says her problem is with the redefinition of who’s responsible for the winter maintenance.

8:21 p.m. Higgins ventures that these paths could be defined as a subset of “sidewalks.” She floats the idea of postponing the ordinance. Warpehoski notes that many councilmembers have a desire to use the sidewalk millage to repair the paths. But he says there’s another problem in that non-motorized connections have been lost because there’s not a mechanism for accepting them for public use. He’s inclined to support the ordinance change, because it puts a mechanism in place to accept a path into public use. But that doesn’t mean that the council has to accept all 33 of the paths for public use. It might be a much smaller set, he says.

8:24 p.m. Lumm notes that not all 33 paths were found to be in current need of repair. Hupy indicates that last year there were four paths in dire need of repair that were not done, because they were not accepted for public use. Lumm doesn’t like the “no-man’s land” aspect of the situation. She sees it as a positive that the millage funds could be used. But the winter maintenance is a problem.

8:32 p.m. Lumm says that she agrees with one of the public hearing speakers, who said that if there’s to be a transfer of responsibility for the maintenance, then the land transfer should be done in a way that is “favorable” to the property owner. Lumm elicits from Elias the fact that under some circumstances, an owner of property adjoining a path could be required to mow grass in the summer, as well as clear snow in the winter.

Anglin says that the 33 paths should be looked at individually and judged on an individual basis. Hupy ventures that schools might be reluctant to participate – because they’re barred by state law from making investments in property off of land that they own.

8:41 p.m. Taylor summarizes the situation. He follows up on a possibility raised by Higgins: Can we find a way to use the sidewalk millage without causing the burden of day-to-day upkeep to shift? Elias traces the issue to the definition of “sidewalk.” Taylor floats the idea of tabling or delaying in some other way.

Lumm moves to postpone until the first meeting in October. Warpehoski asks how a postponement would affect the sidewalks that are in dire need of repair. Hupy says they wouldn’t get repaired this year. Hieftje ventures that if the city has muddled along all this time, three months wouldn’t hurt. Kunselman moots the idea of not using sidewalk millage funds to do the repair. He gives an example of a path that was repaired with park maintenance millage funds. He says if the city asked for the public paths in the first place, then the city should maintain them. Kunselman ventures that it might be necessary to research the history of the platting.

8:42 p.m. The council has voted unanimously to postpone the change in the definition of sidewalks until its first meeting in October.

8:42 p.m. Ordinance: International Fire Code Adoption. The council gave this ordinance change initial approval at its June 17, 2013 meeting. While the change is essentially administrative – changing the version of the International Fire Code adopted in the ordinance from 2003 to a more recent 2009 – some councilmembers on June 17 indicated an interest in exploring the question of frequency of fire inspections. They’ve heard complaints that fire inspections are being conducted too frequently – as a way to generate revenue.

On June 17, fire chief Chuck Hubbard indicated that some of the confusion could be attributed to re-inspections, which are done when a deficiency is found. Hubbard indicated on June 17 that fire inspections have increased. He’s increased the number of personnel assigned to fire inspections from three to seven.

Ann Arbor fire inspections: 2006-2012. (Data is from city financial records. Chart by The Chronicle.)

8:42 p.m. Lumm thanks staff for their work in responding to questions.

8:42 p.m. The council has voted unanimously to adopt the 2009 International Fire Code.

8:43 p.m. Recess. The council is now in recess.

8:55 p.m. The council is back from recess.

8:56 p.m. Ordinance: Video Privacy. This ordinance still hasn’t received an initial approval, as the council has delayed voting several times. It sets forth various conditions for the placement of public surveillance cameras. The most recent postponement came at the council’s June 17, 2013 meeting. The council seemed willing to postpone a vote on that occasion based on the fact that police chief John Seto was not available to answer questions about the impact on law enforcement activities. Some councilmembers indicated at that meeting a reluctance even to give the ordinance an initial approval.

9:01 p.m. Police chief John Seto is addressing the council from the podium. He’s reviewed many versions of the ordinance. He thanks everyone for their work. As chief, his responsibility is to provide service and protection for all. He says he wouldn’t apply technology that has negative implications for communications. He can’t predict the security concerns and policing needs of the future. Large crowds themselves create an added risk. He can’t support an ordinance that would limit his ability to monitor large crowds like those associated with the Ann Arbor marathon. To be able to use live monitoring only when there’s an imminent risk would be limiting, he says. Because he can’t know the policing needs of the future, there could be unintended consequences.

9:08 p.m. Anglin asks Seto if he sees the ordinance as limiting what’s been done in the past. Seto said that he can’t recall a case where that’s been done. Kunselman asks if Seto is familiar with the West Willow neighborhood. Seto wasn’t able to provide definitive information.

Warpehoski ventured that former police chief Barnett Jones felt that video surveillance would never be accepted in this community. He asks if Seto felt that the ordinance would give him the regulatory framework that would allow the community concerns to be addressed. Briere says one of her concerns about crowd surveillance was that almost all of the footage that was useful in the Boston marathon bombing was from private cameras. She appreciated that the human rights commission, Warpehoski and Anglin had tried to find a balance. But she wondered if the balance had actually been found. Seto said he’s not advocating the use of cameras, but felt that if the need does arise, he wants to make sure that there’s flexibility.

9:11 p.m. Kunselman refers to the comments made during the public commentary about the possibilty of police misconduct in the use of cameras. Seto says that the in-car video cameras already used by officers are subject to departmental policies. Hieftje cites a memo written by Susan Pollay, executive director of the Ann Arbor Downtown Development Authority, about the use of cameras in parking structures. Hieftje cites the issue of the perception of safety – saying that some people say they’d feel more comfortable in an underground parking garage if there was video surveillance.

9:19 p.m. Hieftje said that back in 2001-02 there were problems in Liberty Plaza, and the city had filmed from the building overlooking the park. Those cameras were hand-held, Hieftje said. Hieftje wanted to know if Seto felt that the ordinance would inhibit his ability to undertake necessary operations.

Kailasapathy wondered if the required sign stating the presence of a camera would undermine the point of the surveillance. For short-term use, Seto said, the sign would have an impact. Lumm discusses with Seto the requirements for installation of cameras. Lumm recounts how all the windows of her car were smashed in the Fourth & Washington parking structure, but there were no cameras in place to capture any footage.

Taylor says that this ordinance might be “a regulation too far.” But he notes that the chief’s job description was similar to the council’s job: Law enforcement should be consistent with community values. So he felt it should be voted forward to a second reading, which would provide an opportunity for a public hearing.

9:24 p.m. Kailasapathy ventures that the FBI would not have to adhere to the local ordinance, if the FBI wanted to conduct surveillance. Higgins brings up University of Michigan football games. She says that crowds are monitored for football games. Seto says that on a liberal interpretation, it might have an impact on his ability to use cameras for football crowd monitoring. But UM would be able to continue to do that, Seto says.

Kunselman inquires what the law is when a camera catches someone doing something illegal on their own property – if they have a reasonable expectation of privacy. City attorney Stephen Postema says he has not researched the issue. Higgins ventures that if the city has been working on the ordinance for a long time, then surely the city has an understanding of what privacy in a home means.

9:28 p.m. Kailasapathy asks if it’s OK for a camera to be trained on a front door to monitor who is entering and leaving a residence. Postema says it depends on what is done with the footage. Briere brings up Google Street View cameras and how it blurs images of people’s faces. Briere agrees with Taylor that there should be a discussion in the community. Passive surveillance can be used well or not well, Briere says, adding that she wished it weren’t used at all.

9:36 p.m. Warpehoski says that placing a camera on a pole and pointing it into a neighborhood is an affront to privacy and the ordinance would prevent that affront. The ordinance tries to find a balance between privacy, property owner rights and law enforcement needs. He doesn’t want cameras to be put in over neighborhood opposition. Warpehoski says he put forward the best ordinance he knew how to put forward, but allowed that there were still things that could be worked on. He asks for support at first reading, but tells his colleagues not to vote for it on first reading just to please him – if they were definitely not going to vote for it on second reading.

Anglin says the ordinance is preemptive, and that the ordinance allows cameras to be installed as useful tools. He gives destruction of property in parks as a use case for the cameras. He doesn’t think it’s a solution looking for a problem, he says – a response to remarks from Kunselman at an earlier meeting.

Kunselman responds to the idea of a “regulatory framework” and wonders why the council is not providing guidance on policy to the administration. Ordinances are passed to regulate behavior, and there are punishments for violating them. He wondered if Seto violated the ordinance, would he be fired? Kunselman said he would support giving policy direction. In any case, the city can do what it needs to do, he says. If Seto needs to use a camera to catch a suspect, Kunselman says, then, “By golly, let him do it!”

9:47 p.m. Kunselman describes how the relationship between the police and young people has changed from the time when he was young. He returns to his idea of giving guidance through policy. Lumm says that it’s overly regulatory. The balanced approach that Seto would take would not result in the application of technology that would harm the community, Lumm says. She says she wouldn’t support such an ordinance unless it had Seto’s unequivocal support. So Lumm won’t support it at first reading.

Briere said generally she’s inclined to advance an ordinance to a second reading. She doesn’t like the ordinance, because she sees it as giving permission for surveillance. She distinguishes between speculative surveillance versus a situation where there’s a targeted deployment. But she’s still inclined to hear from the public. That will help the council make better decisions.

Hieftje says he likes the idea of a policy – alluding to Kunselman’s proposal that policy guidance would be better than an ordinance. Hieftje noted that Ann Arbor is host to events that have the spotlight of the nation on the city. He couldn’t say he’d support it at second reading, but he was willing to support it at first reading.

9:49 p.m. Outcome: The council has voted 5-4 to give the video privacy ordinance initial approval, so it failed. Voting against it were Kailasapathy, Kunselman, Lumm and Higgins.

9:49 p.m. Ordinance: Rezoning for car dealership. The council is being asked to give initial approval to a rezoning of 2271 South State Street from M1 (limited industrial district) to M1A (limited light industrial district). The owner would like to be able to sell automobiles on the site. The city planning commission’s vote on the recommendation was taken at its May 21, 2013 meeting. The vote was 1-8, with only Eric Mahler supporting it. So the planning commission’s recommendation was for denial.

9:58 p.m. Briere points out that the council in the past has put off rezoning decisions based on the pending work on the South State Street corridor plan. Planning manager Wendy Rampson responds to Higgins by giving the example of the Biercamp property, which was not approved because the South State Street corrdidor study was just getting started at that time. There was also a request across the street from Biercamp, so that a property could be used as a medical marijuana dispensary.

Higgins ventures that the city council has the final say on the South State Street corridor plan – to which Rampson says, “kinda sorta.” The planning commission and the city council have to concur, Rampson says. Higgins felt like the property owner had been in the pipeline for a while before the South State Street corridor study was under way. Rampson and Higgins engage in back-and-forth on timing of the citizen participation meetings for the corridor plan and the proposed project requiring rezoning.

Kunselman draws out a letter of support from McKinley for the corridor plan. Kunselman notes that the adjoining bus parking lot might no longer be a factor – as the school district may not continue to offer transportation.

10:01 p.m. Kunselman wonders if it’s good policy to get rid of manufacturing zoning. Rampson explains that the planning commission had also grappled with that. She points to Areas 1C in the plan that recommends maintaining the current uses, which include manufacturing. The area around the parcel that’s requested to be rezoned, Rampson says, has already seen some transition to office use.

10:01 p.m. The council has voted unanimously to deny initial approval to the rezoning of 2271 S. State Street.

10:01 p.m. Ordinance: Kerrytown Place rezoning. There are two items on the agenda related to the zoning that would be necessary for Kerrytown Place – the project that Tom Fitzsimmons is planning to build instead of The Gallery, on the site of the former Greek Orthodox church on Main Street. The rezoning would be from PUD (planned unit development district) to D2 (downtown interface base district).

The first rezoning item affects the parcels with Main Street frontage. The second rezoning item affects the parcels on Fourth Avenue. The city planning commission gave a unanimous recommendation of approval at its May 21, 2013 meeting. On the North Main Street side, the project would include a 16-unit townhouse building with an underground parking garage, 12 carport parking spaces and 24 surface parking spaces. On the North Fourth site – now a surface parking lot – the plan calls for constructing a duplex with a 2-car garage for each unit and a 21-space parking lot. Each unit of the duplex would face North Fourth. The council is just being asked to consider an initial vote on the rezoning tonight, not the site plan. Rezoning requires a second and final vote – at a meeting when the site plan is likely to be presented as well.

10:03 p.m. Briere introduces the items and briefly recites the history of the previously proposed project by a different owner. Kunselman says he’s pleased to support it. He reminds his colleagues that when the property was in the hands of the Washtenaw County treasurer, he’d proposed doing something similar – rezoning the property on the council’s initiation.

10:03 p.m. The council has voted unanimously to give initial approval to the rezoning changes necessary for the Kerrytown Place project.

10:03 p.m. Bond Re-Funding: Sewage. This item refinances $21,500,000 worth of sewage disposal system revenue bonds, which were issued in 2004. The expected savings, according to the staff memo accompanying the resolution, is more than $2 million over an 11-year term.

10:04 p.m. Lumm commends staff for staying on top of these issues. She notes the savings of $2 million.

10:04 p.m. The council has voted to approve the sewage disposal bond re-funding.

10:04 p.m. 2013 City Council Rules. For Chronicle coverage on these changes, see “Council Mulls Speaking Rule Changes.” Highlights include adding public commentary to council work sessions, but reducing public speaking time to two-minute turns. A “frequent flyer” rule would prevent people from signing up for reserved time at the start of a meeting two meetings in a row. The total time that each councilmember could speak on an item of debate would be reduced from eight minutes to five minutes. The council postponed a vote from its previous meeting on these changes.

10:05 p.m. Higgins says she wants to postpone the issue, in light of the absence of Petersen and Teall, who wanted to be a part of the conversation.

10:06 p.m. The council has voted unanimously to postpone the rule amendments until the July 15 meeting.

10:06 p.m. Resolution: Re-establish the mutually beneficial committee. The phrase “mutually beneficial” in connection with the sorting out of issues between the city of Ann Arbor and the Ann Arbor Downtown Development Authority was first mooted in a Jan. 20, 2009 resolution. The main issue at that time was the contract under which the DDA administers the city’s public parking system. Subsequently, committees for both organizations were appointed, but they did not achieve any results. The following year, new committees were appointed and those committees met over the course of several months, culminating in a new parking agreement ratified in May 2011. The council formally disbanded its “mutually beneficial” committee at the end of 2011.

10:06 p.m. The current source of friction between the DDA and the city concerns the interpretation of Chapter 7 of the city code, which regulates the DDA’s tax increment finance (TIF) capture. The DDA has chosen to interpret the Chapter 7 language in a way that does not recognize the cap on TIF revenues that is set forth in Chapter 7. That led to a proposal by some councilmembers earlier this year to revise the ordinance so that the DDA’s alternate interpretation is clearly ruled out. The council gave the ordinance change initial approval on April 1, 2013. But later, on May 6, 2013, the council chose to postpone the vote until Sept. 3, the council’s first meeting that month.

In this resolution, the mutual beneficial committee is tasked with coming up with a recommendation for Chapter 7 revised language with a deadline of Sept. 2. The council will be represented by Christopher Taylor (Ward 3), Sally Petersen (Ward 2) and Stephen Kunselman (Ward 3). The DDA’s July 3 meeting agenda also includes its appointments to a mutually beneficial committee.

10:10 p.m. Briere introduces the item by saying that back in May, several people had said that the staff should be working on the issue. Whatever changes might come to Chapter 7, she felt councilmembers should have a voice. The mechanism for that was proposed to be to “reinvigorate” the mutual beneficial committee. Kunselman says that when the council approved the ordinance at first reading, he and Petersen had begun having conversations with DDA board members and staff. He sees the resolution tonight as solidifying a process that’s already underway.

However, Kunselman doesn’t like the label “mutually beneficial.” It’s now changed to the “joint DDA-council committee.” Higgins wants to add a member – for a total of four councilmembers. Higgins wants Lumm to be on the committee, saying that Lumm has put a lot of work into the issue. That proposal is accepted as friendly.

10:11 p.m. Kailsaspathy brings up the existing DDA partnership committee.

10:12 p.m. The council has voted unanimously to appoint a joint DDA-council committee.

10:12 p.m. R4C Committee. The planning commission had voted at its April 16, 2013 meeting to send recommendations to the city council for revisions to the R4C zoning areas – but without the actual wording of the ordinance changes. Any affirmative action by the council at this point would be to direct the planning commission to develop ordinance language that would reflect the recommendations. At that point, the planning commission would need to approve the proposed ordinance language, with final action still required by the council.

The zoning change recommendations resulted from work done by a citizens advisory committee that was established in the summer of 2009. Due to dissatisfaction about how the recommendations were handled, the council is reconstituting the citizens advisory committee. On the committee, Sabra Briere (Ward 1) will represent the planning commission. Chuck Carver will represent rental property owners. From the wards: Ilene Tyler and Ray Detter (Ward 1); Wendy Carman and Carl Luckenbach (Ward 2); Ellen Rambo and Michelle Derr (Ward 3); Julie Weatherbee and Nancy Leff (Ward 4); Eppie Potts and Anya Dale (Ward 5). Weatherbee will chair the group.

10:14 p.m. Higgins introduces the resolution, alluding to a neighborhood meeting that had taken place the previous week. Lumm thanks Higgins for her work. She wonders when the council might be asked to act on the recommendations. Higgins said that the committee would meet only two or three times. She said that before the council acts on the planning commission recommendations, the committee should be able to weigh in.

10:14 p.m. The council has voted to re-establish the R4C citizens advisory committee.

10:16 p.m. Appointment of Jean Cares to the greenbelt advisory commission as the agriculture landowner representative. Taylor, who also serves on GAC, introduces the resolution. He mentions that Cares owns the Dexter Mill. Hieftje says that it’s a difficult slot to fill.

10:16 p.m. The council has voted to postpone the appointment. This is a standard procedure, as this initial consideration is considered the nomination by the council. GAC is one of the few boards and commissions for which the council, not the mayor, makes the nominations.

10:16 p.m. South State Street Corridor Plan. This resolution would adopt the South State Street corridor plan into the city’s master plan. The city planning commission voted unanimously to adopt the plan at its May 21, 2013 meeting.

10:19 p.m. Higgins says she has concerns about adding the corridor plan to the city’s master plan. She asks for postponement.

10:20 p.m. The council has voted to postpone the South State Street corridor plan for two weeks.

10:21 p.m. The council has voted to go into a closed session to discuss pending litigation, which is one of the reasons allowed by the Michigan Open Meetings Act.

10:40 p.m. The council has emerged from closed session.

10:41 p.m. Box hangar bonds for airport. This is a notice of intent to issue up to $900,000 of bonds to fund construction of a new box hangar at the Ann Arbor municipal airport.

10:41 p.m. The council has voted to give notice of intent to issue the bonds for the box hangar construction.

10:41 p.m. Miller Avenue assessment for sidewalk curb and gutter. The special assessment would apply to 18 private property owners, who would pay an average of $365 apiece. The total construction cost of the project is stated in the table of assessment as $42,860 – with about 75% of that to be paid for with federal funds. This resolution is the fourth and final one in the process. A public hearing was held at the council’s previous meeting.

10:41 p.m. The council has voted to approve the special assessment for Miller Avenue improvements.

10:41 p.m. Arbor Oaks Rain Gardens. This item would award a $149,925 contract to Erie Construction LLC for construction of rain gardens.

10:41 p.m. The council has voted unanimously to award the rain garden construction contract.

10:41 p.m. Accept 33 sidewalks for public use. Under the city charter, a land transaction requires an eight-vote majority, and this qualifies as a land transaction. The item relates to the ordinance change that was postponed earlier in the meeting, which would have changed the definition of “sidewalk” in the city code. The staff summary of the result of a meeting with adjoining property owners includes this: “There was a general consensus amongst attendees at the public meeting that City Council should postpone voting on these items until further discussion can be had and more details can be worked out.” For many of the specific paths, there was a reluctance to accept the responsibility of snow removal during the winter.

10:42 p.m. The council has voted to postpone the acceptance of the sidewalks for public use until its first meeting in October.

10:42 p.m. Fair Food Network grant to Ann Arbor farmers market. This item accepts $36,000 in funding from the Fair Food Network to administer the Double Up Food Bucks program at the Ann Arbor farmers market. The program provides a match of up to $20 per person per day to people using BSNAP (Bridge Cards/EBT/Food Stamps) to purchase produce at Michigan farmers markets.

10:42 p.m. The council has voted to accept the $36,000 grant.

10:43 p.m. Precinct 2-8 polling place relocation. This would change the polling place for Precinct 2-8 from St. Paul Lutheran School, 495 Earhart Road, to First United Methodist Church, 1001 Green Road. According to a letter sent earlier this year by school principal Brad Massey to the city, the decision to stop offering St. Paul Lutheran Church and School as a polling place to the city was based on “recent events affecting the safety of school children.” [.pdf of April 16, 2013 letter]

10:43 p.m. Lumm thanks St. Paul for allowing the city to use the facility as a polling location for many years.

10:43 p.m. The council has voted unanimously to change the Precinct 2-8 polling location to the First United Methodist Church.

10:44 p.m. Appointments. The council is being asked to confirm tonight the nominations put forward at the council’s June 17, 2013 meeting. Among them is Jeremy Peters to the planning commission. Also on the agenda for confirmation are Eric Jacobson to the local development finance authority (LDFA) board and Jan Davies McDermott to the economic development corporation board.

10:46 p.m. Outcome: The council has voted to confirm all the appointments.

10:46 p.m. Nominations. Russ Collins was nominated for a re-appointment to the board of the DDA. The nomination actually came chronologically before the confirmation votes.

10:47 p.m. Council communications. Taylor updates the council on the park advisory commission’s action at its June 18, 2013 meeting to recommend a waiver of fees for Liberty Plaza – in response to a request from Camp Take Notice to make sure that Pizza in the Park can continue at that location.

10:48 p.m. Public Commentary. There’s no requirement to sign up in advance for this slot for public commentary.

10:54 p.m. Seth Best addresses the council, beginning by thanking everyone. He’s speaking on behalf of Camp Take Notice’s advocacy for humanitarian aid generally, not just for Liberty Plaza. He was concerned that humanitarian aid was being excluded because of concern for music, bands and art. He tells his story of becoming homeless in Texas, eventually making his way to Ann Arbor. Pizza in the Park had allowed him to be human again, he said – at least for an hour.

10:57 p.m. An EMU faculty member and MISSION board member is now addressing the council in support of the Camp Take Notice advocacy for Pizza in the Park. Caleb Poirer speaks next, and quips that this is too early to end a council meeting. He characterizes the PAC resolution as an attempt to address the concerns that Camp Take Notice had raised, but says that it doesn’t actually address their concerns. That’s why they’re continuing to push for a more general ordinance. He allows that the homeless are not natural constituents of any politician. So he was grateful that the council had been willing to give them “the time of day.”

10:57 p.m. Adjournment. We are now adjourned. That’s all from the hard benches.

A sign on the door to the Ann Arbor city council chambers gives instructions for post-meeting clean-up.

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The underwriting was a necessary condition of the DDA’s ratification of a new contract with the city, under which the DDA would continue to operate the city’s public parking system. At a special meeting last Friday, May 20, the full DDA board had approved a contract that would transfer 17% of gross parking revenues to the city.

The wordsmithing is not yet final, but key elements of the underwriting clause would include: (1) it’s applicable only through 2016; (2) it’s triggered if combined DDA fund balances fall below $1 million; (3) the trigger is evaluated based on the annual audit of DDA books in September or October of the previous fiscal year; (4) if underwriting were triggered, it would take the form of reducing existing payments that the DDA makes to the city; (5) the city’s liability is limited to $1 million annually and $2 million cumulatively; (6) any money the city is deprived of through this underwriting would be restored to the city, at whatever point the DDA’s cumulative fund balance reaches $4 million.

At the May 25 meeting, the committees also agreed on how the DDA board and city council will handle a contractually required consultation between the two groups, in conjunction with parking rate changes. That consultation will now be a required agenda item at annual joint working sessions between the DDA board and the city council. Currently, the DDA proposes rate changes, which are automatically enacted, unless the city council vetoes them. The new contract stipulates that the DDA would have sole authority to set rates.

The DDA board has scheduled a special meeting to ratify the work of the committee, at noon on Friday, May 27, 2011. That would allow the city council to ratify the parking contract on Monday, May 31, which would help settle part of the city’s revenue issues in its fiscal year 2012 budget, and allow the council to finalize its budget on that day. [For additional background, see Chronicle coverage: "Ann Arbor Council Defers Action Again"]

Left to right: DDA board members Bob Guenzel, John Mouat, Sandi Smith, and Russ Collins at the May 20 DDA special board meeting. Obscured from view between Guenzel and Mouat is John Hieftje. They were distributing the paper handouts with calculations of excess TIF revenues. (Photos by the writer.)

It was also intended to settle the matter of excess capture of TIF (tax increment finance) revenue in the DDA district – an issue raised by the city of Ann Arbor just before the DDA board had originally planned to vote on the new parking contract on May 2.

The board did vote on Friday to affirm a calculation by DDA staff that roughly $473,000 of excess TIF capture since 2004 would be divided among the following taxing authorities, which have a portion of their tax revenues captured in the DDA TIF district: Washtenaw County; Washtenaw Community College; and the Ann Arbor District Library.

Based on a representation at the special meeting by mayor John Hieftje – who has a statutory seat on the DDA board – the city of Ann Arbor is likely to agree to “forgive” the $711,767 in excess TIF capture that would be due to the city. More than that amount has effectively already been returned to the city, in the form of a roughly $0.5 million annual grant to the city to help make bond payments on its new municipal center, and a $1 million expenditure to demolish the old YMCA building, as well as other grants. In total, around $7.5 million has gone to the city, according to the DDA.

At Friday’s special meeting, the DDA board also voted to ratify its side of a new contract under which it would continue to operate the city’s public parking system. Among other features, the new contract would obligate the city of Ann Arbor to report regularly on how it is using public parking system revenues for street repair in the downtown, and how it is enforcing parking regulations downtown.

More controversially, the new contract would allow the DDA to set parking rates. Currently, the DDA forwards proposed rate changes to the city council, which can then veto the DDA’s proposal if it acts within 60 days. If the council does not act to block the rate change, the change is enacted. Although Hieftje said at the DDA board meeting he felt there was adequate support on the council to approve such a contract, there are currently at least five likely no votes on the 11-member council.

Also controversial is the exact percentage of gross revenues the city would receive from the public parking system. Before the issue of the excess TIF capture arose, the DDA board was poised to ratify a parking contract that would transfer 17% of gross parking revenues to the city of Ann Arbor’s general fund. At Friday’s special meeting, the resolution before the board dropped that number to 16%. Hieftje proposed an amendment to raise the figure to 17%. That amendment was attached to a contingency that the city council would provide a plan amendable to the DDA in which the city would “underwrite” the DDA’s fund balances. It was the 17% with a contingency that the DDA board passed.

So the special DDA board meeting did not settle with finality either the issue of the excess TIF capture or the DDA’s side of the parking contract. For the TIF capture issue, the relevant taxing authorities – especially the city of Ann Arbor – will need to affirm the solution that the DDA board approved.

For the parking contract issue, the DDA’s contingency means that the city council’s Monday, May 23 meeting – which is a continuation of its May 16 meeting, when it was supposed to approve the FY 2012 budget – will likely be recessed and continued again on May 31.

One possibility for how events would unfold is this: (1) May 23 – the city council ratifies the city’s side of the parking contract and provides the plan for underwriting DDA fund balances; city council also deliberates and amends FY 2012 budget but does not take a final vote on it; (2) May 24-27 – DDA schedules a special meeting to accept the parking contract contingency; and (3) May 31 – city council resumes the meeting started May 16 and previously continued on May 23, and approves FY 2012 budget. [.pdf of draft parking contract]

Historical Background: May 2, 2011

Board chair Joan Lowenstein led off with a confirmation from Joe Morehouse, the DDA’s deputy director, that the special meeting had been properly noticed to the public under the Open Meetings Act. Morehouse indicated that a paper notice had been posted at city hall, and the meeting had been added to the city’s online Legistar scheduling system, and posted to the DDA’s website calendar.

Lowenstein began by reviewing where things had stood before the May 2, 2011 DDA board meeting. The DDA board had been poised to ratify its side of a new parking contract under which it would continue to operate the city’s public parking system.

By way of background, the DDA has already transferred $2 million more to the city from the public parking revenue than the current contract with the city requires. The decision last year to transfer an additional $2 million of parking revenue to the city was made at a board meeting last April, over strong objections of some board members. [Chronicle coverage: "DDA OKs $2 Million Over Strong Dissent"]

The details of the new parking contract have been negotiated at public meetings between so-called “mutually beneficial” committees of the city council and the DDA board for nearly a year, starting in June 2010. Before that, a “working group” of councilmembers and DDA board members had worked out of public view since early 2010 to establish a term sheet as the basis of the negotiations.

Last summer, as the two committees finally emerged into public view to start the negotiations, their stated goal was a ratified new contract by Oct. 31, 2010. That goal was not met.

Key Features of New Parking Contract

Key new elements of the new parking agreement include a requirement that the city report to the DDA on its street maintenance activity in the downtown area, as well as its parking regulation enforcement activity. A standing committee composed of DDA and city staff would help ensure communication on enforcement issues. The term of the proposed contract would be 11 years, with a one-time renewal through 2033, which is the end of the DDA’s lifetime. [First established in 1982 for 30 years, and set to expire in 2012, the DDA was renewed by a city council resolution in 2003.]

More significantly, however, would be a new authority for the DDA to set parking rates independently of the city council. Currently, the DDA forwards proposed rate changes to the council, and those changes automatically take effect unless the council acts to veto them. The new contract would eliminate the city council veto power.

The financial component of the new parking contract reflects a significant conceptual change – moving from multiple categories of fixed payments to a percentage-of-gross approach. One example of a fixed payment in the current contract is for roughly $840,000 to be transferred from public parking revenue to the city’s street repair fund – an amount that is keyed to an inflationary escalator.

Another example of a fixed payment is the DDA’s payment of up to $2 million in “meter rent” – the current contract stipulates $1 million, with an option for the city of Ann Arbor to request $2 million in any one year, as long as the total amount of meter rent over the 10-year life of the contract (ending in 2015) does not exceed $10 million. Through the 2010 fiscal year, $10 million in meter rent had already been transferred to the city under the contract – which is why the additional $2 million transferred last year, for FY 2011, was controversial.

The exact figure for the percentage-of-gross payment had been a contentious issue, but on May 2 the DDA board was poised to ratify the contract at 17%.

At Friday’s special board meeting, Lowenstein reminded board members how on the morning of May 2, they’d been informed of the clause in the city’s ordinance on the DDA – contained in Chapter 7 – that limits the amount of TIF capture.

Briefly put, the mechanism of a tax increment finance (TIF) district allows an entity like the Ann Arbor DDA to “capture” a portion of the property taxes in a specific geographic area that would otherwise be collected by taxing authorities in the district.

Lowenstein set up the parking contract discussion by explaining how the DDA had an unexpected obligation to return $473,000 in excess TIF capture to taxing authorities in the district.

Deliberations: Parking Contract Percentage – The Case for 16%

Board deliberations on the financial conditions of the parking contract were intermingled with discussion of the return of excess TIF revenue, because of the impact on DDA fund balances of the one-time $473,000 payment to taxing authorities in the DDA’s TIF district.

Board chair Joan Lowenstein began the deliberations on the contract by saying that the whole point is to continue to partner with the city on management of the parking system. The reason the DDA board was considering re-opening the contract at all is that the city of Ann Arbor needs additional money, she said, and there will be a continuing need.

At the same time, Lowenstein cautioned, the DDA has a responsibility to maintain the city’s parking infrastructure, and a responsibility to maintain a fund balance. If projections for parking revenues are off by 1 or 2 percentage points, she said, that completely changes the DDA’s budget. If there’s a cost overrun for the Fifth Avenue underground parking structure that’s currently under construction, there needs to be a fund balance that could handle those eventualities and handle them quickly.

The return of $473,000 in excess TIF capture to taxing authorities in the district, Lowenstein said, had resulted in the resolution that the board was considering: a percentage-of-gross figure of 16% for the parking agreement, instead of the previously contemplated 17%. Even on a 16% scenario, she continued, there would be low combined fund balances for the DDA: FY 2012 – $3.08 million; FY 2013 – $2.17 million; FY 2014 – $2.33 million; FY 2015 $2.04 million; and a low in FY 2016 – $1.93 million. The $1.93 million was very low, she said, but the DDA was willing to endure that, in order to provide a fair parking revenue to the city.

DDA board member Russ Collins wanted to know what the future impact might be on DDA TIF revenues, as compared to the DDA’s 10-year plan, given that TIF capture would now be calculated correctly. Joe Morehouse, DDA deputy director, explained that in the next year, the TIF valuation is expected to drop. And the DDA’s 10-year plan uses an average projection of a 2% increase in TIF revenue per year, so the impact of the correct calculations in the future would be zero, Morehouse explained.

Board member Bob Guenzel asked for clarification of why the DDA fund balance will be less than previously anticipated. Morehouse explained that it’s due to the one-time payment the DDA will need to make to return excess TIF capture to the taxing authorities in the DDA TIF district.

Deliberations: Parking Contract Percentage – Reverting to 17%

Mayor John Hieftje asked Morehouse to provide the fund balance figures for the 17% scenario.

Year by year, here’s what those numbers looked like [the fund balance is expressed as a percentage of reserves in parens]: FY 2012 – $2.9 million (14.5%); FY 2013 – $1.8 million (8.7%); FY 2014 $1.8 million (8.2%); FY 2015 – $1.34 million (5.7%); FY 2016 – $1.03 million (4.3%); FY 2017 – $1.94 million (8%).

Hieftje said he wanted to ask the DDA to consider that the city is ultimately responsible if the DDA defaults on its obligations. And the city would be willing to “backstop” the DDA for the years when the DDA was concerned about the fund balance being low. It was much more important to put the parking contract in place so that the city would have the yearly income, he said. He felt the DDA could live with those fund balances. He did not think it made sense to plan a long-term agreement on the basis of just avoiding a low fund balance in a specific year.

DDA board member John Mouat noted that the DDA had not been in negotiation mode for a while – the resolution before them was the DDA’s “best take” on the situation, and then it would go to the city council. Lowenstein confirmed that back on May 2, the DDA had effectively concluded negotiations through its mutually beneficial committee. The only change to the situation has been the impact of returning excess TIF.

Guenzel then asked Hieftje if he thought he had enough support on the council for the new parking contract, if the percentage of gross were set at 17%. Hieftje replied that he felt there would be sufficient votes. Guenzel noted that there’s no way to predict for sure. Hieftje allowed that there is discomfort among some councilmembers about the provision in the contract that would allow the DDA to set parking rates. He characterized their concern as not wanting to be seen as using the DDA as a buffer between themselves and voters.

Hieftje went on to say that the city’s CFO and acting interim administrator, Tom Crawford, had said that if the percentage of gross is 16%, then the city would need to make an additional $250,000-300,000 reduction to its general fund budget this year and next. The city was currently doing everything it could to save police and fire positions. He noted that some on the DDA board had asked why that’s the DDA’s problem. [Newcombe Clark, who was absent from Friday's special meeting, has articulated that sentiment, for example.] Hieftje said that it’s all of our problem.

Mayor John Hieftje drafts language of the amendment to the parking contract resolution that ultimately was passed by the board.

Hieftje then offered an amendment to the resolution, changing the amount to 17%. Guenzel seconded the amendment. Leading off discussion of the amendment, Sandi Smith, who sits on the city council as well as the DDA board, said that if it’s important to maintain a fund balance, then there are other strategies the DDA can explore. In the DDA’s 10-year plan, for example, a contribution to the housing fund, which has been paused this year, resumes in 2013. Eliminating that would start to change the picture. Smith also pointed out that the DDA had set aside $500,000 to support the go!pass program, which subsidizes bus passes for downtown employees. If there’s a concern not to drop the fund balance down to 4.3%, then there are ways to change that. Smith said none of the decisions are easy.

Smith went on to say that the city of Ann Arbor is planning to dip into the general fund reserve balance for around $1 million, which is not a position the city wants to be in. But back when the DDA was planning to build the underground parking garage currently under construction, the city’s CFO, Tom Crawford, had cautioned the DDA about maintaining a fund balance of around 15%, and she had taken that to heart. She said she was “tormented” about the issue, but was willing to hear the arguments of others on the board.

Gary Boren clarified that they were currently debating just the amendment to change the number from 16% to 17%. With all due respect, he said – responding to Smith’s suggestion of cutting housing fund transfers or alternative transportation grants – those are elements of the DDA’s core mission. Those go to the heart of what the DDA does, and affects what the DDA will be able to do in the future.

Lowenstein added that in order to accommodate the city of Ann Arbor’s need for additional revenue, the DDA’s budget already includes deferring some maintenance on the parking structures.

Hieftje said that what he’d heard for a while reported back from the city’s negotiating committee was a concern about the DDA’s fund balance, based on Crawford’s comments. He contended that Crawford remembered his remarks about fund balances a little differently from what Smith had portrayed.

Hieftje suggested an additional meeting of the two negotiating committees to give the DDA some comfort with respect to the city’s assurance that it would backstop the DDA’s fund balances. That way, if there were a problem with a construction overrun or a drop-off in parking demand, the DDA would have some assurance that the city would step in and fill the gap. It’s certainly not in the city’s interest to see the DDA fail to meet its financial obligations, Hieftje said. “We can make that good,” he told his DDA board colleagues. He pointed out that it’s the city’s general fund reserve that matters for bond ratings. If the DDA needed the money, Hieftje said, it would be there.

Board member Russ Collins asked if the sentiment that Hieftje had expressed could be added to the amendment adjusting the amount from 16% to 17%. Hieftje then suggested that he’d asked councilmembers to add time on May 31 to their calendars for another meeting. The two negotiating committees could meet, then let the city council make a decision on the parking contract on May 23, when council’s meeting – begun on May 16 – resumed.

Smith asked Hieftje to provide some information about what was happening in the state legislature with respect to health care benefits for public employees. Hieftje allowed that the legislation had the potential to have a good impact on local governments because it would require some public employees to contribute 20% of their health care costs. But he said that would be too far down the road for it to have an immediate impact.

Lowenstein clarified that if it were to be necessary that the DDA required support from the city to meet its obligations, then any expenditure over a certain amount would need city council approval. Hieftje allowed that he couldn’t guarantee that the council would approve such an expenditure, but he thinks there would be strong support for it. It’s not in the interest of the city to see the DDA default on its obligations, Hieftje said.

Guenzel said the issue with percentages is really tough. Having worked in an organization where the goal was an 8-12% reserve, it’s very important. [Before retiring in May 2010, Guenzel had served as Washtenaw County administrator.] He said he might disagree with Crawford that 15-20% should be a goal, but said that 8-12% is necessary. He had a concern that with 16% and 17% as a percentage of gross in the parking contract, there’s a difference in the fund balance levels. He noted that the future could look better than what the DDA was forecasting – these are projections.

Guenzel said he liked the idea of the city stepping up and making a statement. The question is whether it could bind a future council. He stressed that the DDA did not want the city to take over its assets – the DDA is a separate entity. But if they were talking about a partnership, then if the city is willing to consider making some kind of an assurance on the DDA’s fund balances, he’d vote for 17%.

Roger Hewitt expressed concern about the fund balance – it would not be above $2 million again until 2017, he observed. He said he was interested in seeing what the city would be willing to offer in the way of an assurance. But on the 17% scenario, it left the DDA with a pretty slim balance, he said, especially with a $50-million construction project currently being built. The DDA’s deputy director, Joe Morehouse, who handles financial matters for the DDA, had suggested $3.5 million as the cash balance needed for the organization, Hewitt said.

Hewitt said he was willing to attend one more negotiating committee meeting, but without some assurance from the city to guarantee the DDA’s fund balances, he was not comfortable with 17%.

DDA board member Roger Hewitt gazes at the wall of fund balance numbers projected on the screen during deliberations on the parking contract.

Picking up on Hewitt’s point about ongoing construction projects, Smith pointed out that soon the amount would reach $60 million, because of the construction on the parking deck that’s part of the City Apartments project to be built by Village Green at the First and Washington lot. The DDA is committed to supporting that parking deck with $9 million in bonds, when the project is completed.

Collins said he’s likely to follow Guenzel’s analysis. To be blunt, he said, when you’re talking about several million dollars, the difference between $1 million and $2 million in reserves isn’t much. He said the committees had worked hard to come up with something that is “equally annoying” to both the city and the DDA, and he felt they’d arrived at that point. [Collins is a member of the DDA's negotiating committee, along with Smith, Hewitt and Boren.] He said he shared an interest in seeing the city chime in with something that would provide some underpinning.

Collins then expressed some general frustration about how the DDA is perceived in the broader community. He said he served on the DDA board to try to do good things for the city, and the downtown in particular. But the word on the street is that the DDA is “up to something.” He said as the DDA tries to accomplish something good for the city, that’s not the word on the street – it’s not in the media that way, and it’s not accepted that way in the hearts and minds of the city council.

Collins said he hoped the new parking contract would help change that perception. He noted that people who sit on the board to try to do something positive are volunteers. He said he would support the 17% contract with that positive tone, even though some people might call him foolish for doing so.

Russ Collins lamented the fact that the DDA board is trying to do good things for the city, but that it's not perceived that way by some people in the community.

Mouat said his concern is that despite two years of conversation, the city and the DDA are still negotiating. He said he tended to agree with Hewitt, that they are not done yet. His tendency would be to put out the 16% offer and then look for the city to provide something to give the DDA more confidence. He was more comfortable with the resolution at 16%.

Smith said that without having a specific “trigger” identified, she could not vote for a contract with 17%. She wanted to either vote down the amendment, or table the resolution. The more she looked at the numbers, the 4.3% fund balance is pretty slim, she said.

Lowenstein said she felt it’s cumbersome and difficult to think about having an additional committee meeting, having the committees make a recommendation, coming back to the DDA for a special meeting, and then having the matter go back to the city council. She also observed that the DDA had been negotiating against itself for a long time. In principle, she’d be in favor of 17% as Hieftje had represented it. One scenario would be to approve the contract at 16%. And if the council is serious about making some kind of pledge in exchange for 17%, then the DDA would only need one more special meeting in order to approve that. That would limit the number of times they have to get a whole bunch of people together, Lowenstein suggested.

Deliberations: Parking Contract Percentage – City Guarantee

Hieftje then offered an additional phrase to his amendment changing the percentage of gross to 17%. The alteration of the amendment made the DDA approval “contingent” on city council approval of a plan acceptable to the DDA to backstop the DDA fund balance in certain years. Collins suggested the word “underwrite” instead of “backstop,” and with that, the altered amendment was under discussion.

DDA board member John Splitt said that with the additional language about the city’s guarantee, he would support 17% as the percentage of gross figure.

Smith said that one concern she had with this scenario is that a future city council would be making decisions about whether the DDA needed to do maintenance on parking structures. She did not want it to be the case that a future city council might choose not to do some preventative maintenance on parking structures, in order to keep the fund balance high.

Hieftje reiterated the sentiment that it’s certainly not in the city’s interest to see the DDA struggle to pay bills or do maintenance. Mouat said it felt to him like board members were hovering around the same concept – they could ponder and ponder, but the devil is in the details. He wondered at what point it would not be the DDA board that would be overseeing DDA funds, but rather the city council. The DDA really needs the city council to be more clear, he said. It’s hard to pass a resolution without knowing exactly how it’s going to work.

Hewitt said he shared the same sentiment as Mouat – he did not want the city council to be performing the function of the DDA board. He said he could support the resolution as amended, but would look very critically as the language eventually proposed by the city council.

Splitt asked Hewitt if the two negotiating committees could work out such language. Collins noted that the DDA’s legal counsel, Jerry Lax is available again – he’s “walking around now.” [Lax underwent a knee replacement.] Hieftje said he could appreciate the discomfort of board members. But he said if the contract with the amendment is not approved by the city council, “the same thing will happen at 16%.” In any event, he suggested that the DDA keep a meeting slot open. He’d told councilmembers to reserve a time on May 31 to which the council could continue its budget meeting – the one already begun on May 16.

Smith asked to review some of the hybrid solutions she’d proposed in the past – scenarios where the percentage-of-gross parking revenues to be transferred would change after a certain number of years. Although Morehouse adjusted the parameters to show DDA board members onscreen what those solutions would look like, there seemed to be little traction on the board for pursuing any of them.

Collins said the DDA needs to remember that some folks at the city were initially looking for 20%. So it’s important to recognize the difficulty of negotiation from the city’s point of view. What they want to do is get this resolved and move on, Collins said. He said the DDA would have the opportunity to manage itself toward better fund balances. Politics is the “art of the possible,” he said. The 17% is hard from the city’s point of view.

Collins allowed that it’s a tremendously small fund balance for a large value of capital assets. As executive director of the Michigan Theater, he said, their aspirations are to have $1-2 million in reserve for a $2.5 million annual budget and a capital asset worth around $10 million. Collins said that $100,000 one way or another isn’t important, but the city’s backing is important.

Guenzel said that under either scenario it’s not enough, so the city’s promise is important. There is a mutual benefit in the new contract, he contended, because it clears up ambiguities. The board needs to get the thing done, he said. He was willing to live with the amendment and pass it that way. He reported that a friend of his had asked him why the DDA is not just turning over all the money to the city. Downtown Ann Arbor is dependent on a thriving city government, he said.

Mouat noted that the DDA was going at the issue yet again at a board meeting – “It’s a hell of a way to do this,” he said. It felt like they were doing the same thing they’d done before. He asked Hewitt and Hieftje if would it make any sense to see if there’s any other key folks on the city council who might participate in drafting the specific language of the city’s underwriting assurance.

Collins stressed that he felt the DDA was already at a decision point. Responding to Mouat’s frustration that the DDA was engaged in the same exercise, he said that progress had been made in the last six months. The board is at the decision point now. It feels the same, but it isn’t, he concluded.

Hieftje asked for confirmation that the projections for future DDA fund balances included TIF revenue from the 601 S. Forest and Zaragon II projects. Morehouse confirmed that the projections did include those amounts. Hieftje said he could not tell the DDA board for sure that council would approve the contract, but he could assure them that he would take it to council. Ultimately, he said, it is a partnership. Responding to comments about the community’s perception of the DDA, there are some pretty staunch defenders of the DDA on the city council, Hieftje assured them.

Splitt said he did not want to delay. He felt that a deal could be made at 17% but not at 16%.

Outcome on amendment: The DDA board voted 8-1 to approve the amendment to change the percentage to 17%, which included a contingency that the city would provide some kind of underwriting language that is satisfactory to the DDA. Dissenting was Gary Boren.

Deliberations: Parking Contract – DDA Rate Setting

Smith proposed an amendment to the contract that addressed the ability of the city to establish parking areas for its employees. The amended language, which was unanimously approved, made it clear that those facilities might also be used for public parking.

But the main concern in the non-financial aspect of the parking contract was for the provision that allowed the DDA to exercise final authority on parking rate changes.

Hieftje noted that some councilmembers have discomfort with the idea that the DDA would have sole authority to set parking rates. He thought there were a majority who would support the contract with that provision, but he felt that a larger majority could be achieved. If there were an annual review one year later after a rate change, where the council could decide if it wanted to take action, that would provide a lot of comfort for some councilmembers, he said.

Smith felt that would undermine a fair amount of what she found mutually beneficial about the contract. Hewitt noted that the DDA is undertaking some fairly dramatic financial commitments, and without the ability to set rates, the DDA couldn’t be confident it can meet those commitments. It’s one of the only things in the contract that the DDA doesn’t already have, he said. With the implementation of a program of transportation demand management, there’ll be a number of different rates, varying with geographic area, time of day, and day of week. He did not want to try to get into a discussion with the city council about some specific rate in a particular location.

Mouat wondered if there were a risk of politicizing rates in different areas, depending on the council ward. Hewitt explained that the idea of transportation demand management is based on where the demand is, not based on what the DDA would like to charge. It’s about what you’re trying to achieve, he said: Do you want someone to park there for two hours or eight hours?

Collins said he thought the DDA could invite the city council to review and comment, just as the DDA invited review and comment from the public. That kind of language could be added. Boren noted that kind of language was already included. The board then agreed to add “city council” explicitly to the list of entities to be consulted before undertaking rate changes [inserted text in italics]:

2. Operational Powers and Responsibilities Within DDA Parking Area.

k. Subject to Article 8, applicable law, and City permitting regulations, and after consultation with the City Administrator, city council and downtown stakeholders, which may from time to time be identified by either the City or the DDA, the DDA shall determine the rates and hours of parking in the Municipal Parking System and file such rates and hours with the City Clerk and otherwise publish such rates in the same manner as City ordinances, which rates and hours shall take effect thirty (30) days after said filing.

Hieftje said he thought the amendment moved in a good direction. Lowenstein pointed out that the council also has representation on the DDA board. [Hieftje and Smith serve on both the city council and DDA board.]

Outcome on amendment: The board voted unanimously to add the city council as one of the entities with which the DDA needed to consult before enacting parking rate changes.

Deliberations: Parking Contract – Parking Rates as Tax

Boren began the deliberations on the main motion to approve the contract by saying, “We don’t have to put our ear to the rail to figure out the direction the train is moving in.” He said there are two issues. One of those is a misperception of what the DDA is all about. A big problem is that the DDA is like Rodney Dangerfield – it gets no respect.

Board chair Joan Lowenstein confers with Gary Boren before the start of the May 20 meeting. Boren was the lone voice of dissent on the parking contract vote.

A second issue, Boren said, is that the city was taking a public service like parking and turning it in to a for-profit venture. That approach is at least marginally going to cause business and residential tenants to try Briarwood Mall instead, he cautioned. Some shoppers will decide to buy shoes at Arborland instead of downtown. When you charge people more to park than it takes to provide the service, he said, it’s effectively a tax. And that pushes people out of downtown. Boren said he sees that as directly in opposition to the DDA’s mission. In the future, he said, the DDA needs to make clearer to the city council the benefits of supporting the downtown. The parking agreement puts downtown money in the neighborhoods, so he’d be opposing it, Boren concluded.

Mouat said he’d struggled for a while with the issue. It’s a tough situation, he said. DDA board members aren’t elected officials, but their job is to represent downtown, and they’re looking out for the community as a whole. If the community is not healthy, then downtown isn’t healthy. He said he was hopeful that when the DDA and the city get past the contract, they can have some fruitful conversations. He said he’d support the contract, but with a little bit of a bad taste in his mouth. He agreed with a lot of what Boren had said.

Collins said he’d support the contract. He recalled the history of the DDA’s stewardship of the parking system. The DDA had taken a negative amenity, and turned it into a much more positive amenity. The DDA had made a decision that the parking infrastructure is a key way it wants to enhance the downtown – that’s the DDA’s legacy, he said. However, he said no positive karma comes from operating a parking system. That’s because you’re charging a fee for something that some people think should be free.

The DDA had tried its best to turn parking into a positive, Collins continued – it’s a burden the DDA carries for the city. In the future, as the DDA considers how it wants to affect the downtown positively, other projects may get lost in the dialogue about parking.

Boren said there were ways the parking contract could have been structured that could have gotten his support: pegging the parking revenues to downtown services. Instead, he said, last year the DDA had given the city $2 million for the right to negotiate, and it was not pegged to the benefit of the downtown. If the DDA must consume itself for the benefit of the city, he said, then it’s not a symbiotic relationship, but rather a a parasitic relationship. The DDA needs to be true to its mission, he said.

As a benefit to the contract, Lowenstein pointed to the reporting that would be required on how the street maintenance money is being spent. Previously, the DDA had been transferring close to $1 million to the city for street maintenance in the downtown, with absolutely no accountability about how it was being spent. In the new contract, there’s a reporting system for what’s being done. There’s also a standing committee on enforcement of parking regulations.

Hewitt said he also agreed with Boren – the contract is far from perfect, from the DDA’s standpoint. There are a few advantages in the new contract, but also some significant disadvantages. He was “not real happy with it.” Looking at the parking system, he said, the DDA was the victim of its own success. For him, Hewitt said, the issue reduces to whether it’s better to run the parking system under this agreement or give system back to the city. His personal conclusion is that it’s better to have the agreement.

Outcome: The board voted 8-1 to approve the new parking contract, with the contingency on a city council assurance on fund balances. Gary Boren voted against the contract.

Return of Excess TIF: Background

The DDA’s tax increment finance district (TIF) by definition captures a portion of taxes in a specific geographic region in downtown Ann Arbor – taxes that would otherwise go to taxing authorities like the city of Ann Arbor (including the Ann Arbor Transportation Authority), Washtenaw County, Washtenaw Community College, and the Ann Arbor District Library.

Only a portion of the taxes are subject to capture – namely, the difference (i.e., the increment) between the baseline property value when the DDA was formed, and the value of improvements made to the property. Increased value of property due to inflation/appreciation after an improvement is made is not subject to capture under the Ann Arbor DDA’s TIF plan. In principle, if no improvements are made to a property within a TIF district that result in an increase in value, no taxes are captured. An example of that is Manchester’s DDA, which was formed fairly recently, in 2005, and there has been no tax capture since then.

The combination of the Ann Arbor DDA’s TIF plan and the Ann Arbor DDA ordinance effectively limit the amount of taxes that can be captured.

The complete Ann Arbor DDA TIF plan is available on the DDA’s website. The TIF plan includes estimates of the year-to-year increase in new taxable value in the district.

Here’s how the DDA’s TIF capture is limited by the TIF plan: If the growth rate of the TIF capture exceeds the amount estimated in the plan, then the excess is supposed to be returned to the various taxing authorities. From the city’s DDA ordinance:

If the captured assessed valuation derived from new construction, and increase in value of property newly constructed or existing property improved subsequent thereto, grows at a rate faster than that anticipated in the tax increment plan, at least 50% of such additional amounts shall be divided among the taxing units in relation to their proportion of the current tax levies. If the captured assessed valuation derived from new construction grows at a rate of over twice that anticipated in the plan, all of such excess amounts over twice that anticipated shall be divided among the taxing units. Only after approval of the governmental units may these restrictions be removed. [.pdf of Ann Arbor city ordinance establishing DDA]

It’s worth noting that the excess TIF capture to be returned to taxing authorities under the Ann Arbor ordinance appears to apply independently of the state statutory requirement that any “surplus” TIF that’s not expended according to the TIF plan be returned to the taxing authorities from which it was captured:

125.1665 Transmitting and expending tax increments revenues; reversion of surplus funds; abolition of tax increment financing plan; conditions; annual report on status of tax increment financing account; contents; publication. Sec. 15. … (2) The authority shall expend the tax increment revenues received for the development program only pursuant to the tax increment financing plan. Surplus funds shall revert proportionately to the respective taxing bodies. …

In previous reporting, The Chronicle identified several questions that would need to be answered in order to calculate the excess TIF capture. Here we add the answers on which DDA calculations of excess were based, from the board discussion on Friday [.pdf of table showing calculations in detail]:

1. What’s the relevant time period? The ordinance identifies the “rate” of growth, which entails comparing valuations over some period of time. Interpretation A would be that each year when the tax rolls are closed (after the Board of Review has handled all appeals), that year’s valuation is compared with the previous year’s, and the percentage difference is calculated. That percentage is compared with the percentage growth forecast by the TIF plan between those two years. Interpretation B would compare a given year’s valuation against the valuation in the first year of the plan (not the previous year) and compute the percentage difference between them. That percentage difference would then be compared against the percentage growth forecast by the TIF plan from the beginning of the plan to the current year. DDA answer: Interpretation A. Note that the span of time in question is since 2003, when the DDA was renewed. Before that, according to board chair Joan Lowenstein, the TIF plan estimates were “wildly optimistic” and the conditions of the ordinance were not met.
2. Which set of TIF plan estimates are applicable – the one labeled pessimistic, optimistic or realistic? The ordinance language refers to “anticipated” growth, without specifying whether that means the “realistic,” “optimistic,” or “pessimistic” estimates. Arguments for either the “optimistic” estimate or the “pessimistic” estimate would be susceptible to the criticism it is not “realistic.” Initial ballpark calculations done by the city have been based on the “realistic” estimates. DDA answer: Use the optimistic forecast.
3. Who is the responsible party for adherence to the ordinance?The taxes captured by the DDA’s TIF district are administered not by the DDA staff, but rather by the city assessor’s office, just as they are for all taxing entities. The city receives an administrative fee for this work equal to 1% of the tax bill – it’s labeled ADMIN FEE on the bill. [When the city council passed last year's budget, Stephen Kunselman (Ward 3) proposed a budget amendment to reduce the administrative fee, but it received little traction and did not pass.] So it’s the city that transfers the DDA’s TIF taxes to the DDA. For other taxing entities, like the Ann Arbor District Library, it’s not completely clear what their avenue of complaint is, if they are owed money that was erroneously captured – through the city of Ann Arbor or through the DDA? DDA answer: Here the calculations do not appear to be affected, but at Friday’s meeting, board chair Lowenstein was not eager to assign blame to any particular person or entity, saying that no one had paid appropriate attention and that it was an “honest mistake.”
4. Does the ordinance language refer to real property only, or also to personal property? The valuations included in this article lump together valuations of real property and personal property. Real property refers to building and land. Personal property refers to pieces of equipment. A specific example of personal property [but from outside the DDA TIF district] would be the planned acquisition by Sakti3 of battery cycling equipment and thermal chambers as part of the firm’s expanded operations. Based on the DDA TIF plan, through 2003 personal property in the DDA district accounted for roughly 25% of TIF capture. DDA answer: The language refers both to personal and to real property.
5. Do payments already made by the DDA to the city of Ann Arbor out of the TIF for the new municipal center count towards any sum that might need to be returned? In May 2008, the DDA board pledged up to $540,000 annually from its TIF capture to help finance the city’s new municipal center. [.pdf of May 7, 2008 DDA board meeting minutes] If it’s determined that too much money has been transferred to the DDA for its TIF capture, then the DDA might point to the money pledged as part of the municipal center finance plan as covering any amount owed to the city of Ann Arbor. DDA answer: Yes, the money previously granted to the city of Ann Arbor out of the TIF fund for various projects – which totals around $7.5 million, according the DDA – should count as already returned under the ordinance.

Return of Excess TIF: Deliberations

During deliberations on the parking contract, DDA board member Gary Boren noted that in the calculation of the excess TIF capture to be returned to taxing authorities in the district, the city of Ann Arbor was anticipated to be willing to “offset” the amount that would have otherwise been returned to the city as a taxing authority in the district – around $712,000. That offset was due to the amount of TIF revenue that had been granted back to the city since 2003.

Boren wanted clarification about by how much the $712,000 had been “overshot.” Board member Roger Hewitt reviewed the figure from the PowerPoint slide Lowenstein had presented in her introduction: $7.5 million. The $7.5 million in TIF that the city of Ann Arbor has received from the DDA since 2003 came in the form of funding for: the Calthorpe project; interest payments on the old YMCA lot; LED streetlights; a sanitary sewer study; municipal center LEED certification; and a municipal center bond payment of $500,000 per year.

So Boren suggested that if an excess in TIF capture were ever to happen again, the DDA would have leverage to justify not returning excess to the city of Ann Arbor – because it had already been returned.

When the board arrived at the second item on the special meeting agenda – the TIF excess capture – it was Bob Guezel who led off the discussion.

He asked DDA deputy director Joe Morehouse if he’d verified the numbers. Morehouse indicated that he had, and they’d been forwarded to the taxing units to which the excess would be returned. The DDA had not received a response from them, however. Guenzel ventured that if they disagree, they’ll let the DDA know. Lowenstein said she’d talked to Josie Parker, director of the Ann Arbor District Library, and they’d agreed to sit down and go over it. Lowenstein said the resolution states that this is the DDA’s calculation. The DDA is willing to go over the figures, she said.

John Hieftje asked that the language in one of the “whereas” clauses be modified – he did not want anyone to be alarmed, but he said that it could not yet be said that the city has agreed to waive the return of the excess that would be due to the city. He suggested that instead it should say something like “is likely to forgive.”

Boren clarified that this is an obligation the DDA has to return the excess – the board is approving the calculation, not the obligation. Russ Collins wondered if it would be more appropriate to check the calculations with the different taxing units, before passing the resolution.

Morehouse suggested that what the resolution was doing is affirming the method the DDA is using to interpret the city’s DDA ordinance.

Boren noted that it was only in the DDA’s interest that board members be aware of the issue of the excess TIF capture issue before they had voted on the parking contract, so he thanked the mayor for bringing it to the DDA’s attention, because it was the right thing to do. Hieftje contended that it was “a head-scratching moment” when the city’s financial staff realized that the clause of the DDA ordinance existed.

Lowenstein ventured that the situation shows you should go back and read your ordinances, and maintained that there was nothing underhanded or nefarious about it.

Outcome: The board voted unanimously to approve the calculations on return of excess TIF.

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

Absent: Newcombe Clark, Keith Orr, Leah Gunn

Next regular board meeting: Noon on Wednesday, June 1, 2011 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

Special meeting: TBD at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

At the March 7, 2011 city council meeting, Tony Derezinski (Ward 2) was appointed as a hearing officer to consider appeals of recommendations to revoke liquor licenses. To Derezinski's right are Margie Teall (Ward 4), Sandi Smith (Ward 1) and Stephen Kunselman (Ward 3). (Photos by the writer.)

Also postponed – until the council’s first meeting in April – was a resolution that would outline a way for the Ann Arbor Downtown Development Authority to lead the process of transforming surface parking lots currently owned by the city of Ann Arbor to alternate uses.

The resolution, which articulates the so-called “parcel-by-parcel plan,” had already been postponed once before. In explaining the rationale for the postponement, Christopher Taylor (Ward 3) cited the desire of the DDA to ensconce the parcel-by-parcel plan in a contractually binding agreement, which he said had not been previously indicated.

Not postponed was a vote on appointing a hearing officer for appeals of recommendations that liquor licenses not be renewed. The original resolution was to appoint the members of the council’s liquor license review committee to a hearing board, but it was amended at the table – to the surprise of some councilmembers – to allow for appointment of just one hearing officer: Tony Derezinski (Ward 2). Derezinski also serves on the liquor license review committee. Voting against the amendment, as well as the final appointment, were three councilmembers, including Stephen Rapundalo (Ward 2). Rapundalo chairs the council’s liquor license committee and has served on it since it became a permanent council committee in 2008, as well as before that, when it was an ad-hoc committee.

The council also approved the city’s Parks and Recreation Open Space (PROS) plan – an inventory, needs assessment and action plan for the city’s parks system, which is required by the state for certain grant applications. The deadline faced by the council to renew the five-year plan was April 1, 2011.

In other non-marijuana business, the council approved a “complete streets” policy, authorized a stormwater study in the Swift Run drain system, established a loan loss fund for the Property Assessed Clean Energy (PACE) program, and authorized the purchase of LED streetlight fixtures.

The council also heard its usual range of public commentary and communications from its own members. A public hearing was held on the establishment of a Washtenaw Avenue corridor improvement authority (CIA), during which Ypsilanti mayor Paul Schreiber spoke. The Chronicle will cover the mayor’s comments as part of a future report on a CIA public meeting conducted by city planning staff.

Liquor License Non-Renewals

By way of background, the city has in the past faced certain legal hurdles to revoking liquor licenses when a licensed establishment has, in the view of city officials, become a problem. The lack of a due process for making recommendations to the state liquor control board to revoke a license was a barrier to the city to act on problem cases. For example, two years ago the city was faced with a situation where one licensed establishment, Studio 4, had accumulated 20 citations for liquor law violations over a seven-year period. From an Ann Arbor News report by Tom Gantert, published on March 9, 2009 [emphasis added]:

Police say they’ve been called to Studio 4 numerous times in the past two years for incidents ranging from brawls to underage drinking.

From 2001 to 2008, Studio 4 was cited for 20 liquor law violations that were forwarded to the Michigan Liquor Control Commission.

“That is excessive,” said Ken Wozniak, a spokesman for the state liquor board.

The nightclub on South Fourth Avenue also is among a handful of businesses the city went after in 2006 for failure to pay property taxes. City Attorney Stephen Postema said Studio 4 didn’t pay its taxes for about five years, racking up a bill of $41,500, but eventually it was paid.

The City Council is in the process of changing its liquor ordinance, and council members say they want to add provisions that would allow them to revoke liquor licenses from problem bars, while still allowing the bar owners due process.

The current ordinance doesn’t have the language for due process, Council Member Stephen Rapundalo said. Wozniak said the state liquor commission couldn’t interfere with a city’s decision to pull liquor licenses.

The city’s mechanism to address the due-process issue grew out of a slightly different dilemma: What establishment  should receive the extra license that had been granted to the city to award at its discretion? On Feb. 20, 2007 the council had appointed an ad hoc committee to help determine which establishment should receive that license – its members were Stephen Rapundalo (Ward 2), Bob Johnson (Ward 1) and Ron Suarez (Ward 1). [Johnson and Suarez no longer serve on the council.] The city council, amid some controversy, eventually awarded the license to the city itself, to be used at Leslie Park Golf Course.

The ad hoc committee had begun to address various issues related to liquor licenses that the council felt were important to continue to address, among them the question of how to deal with problem establishments. And on May 5, 2008, the ad hoc committee was established as a permanent committee of the council, with Suarez, Rapundalo and Mike Anglin (Ward 5) as members.

By May 18, 2009, the city council was ready to approve an overhaul to its liquor ordinance. The Chronicle’s report from that meeting gave the revision only a glancing mention. [On the same night, the council approved the city's budget for the year.] The key passage in the new ordinance, relevant to Monday night’s deliberations, is the following [emphasis added]:

Prior to filing an objection with the [State of Michigan's] liquor control commission to renew a liquor license, the City Council shall do the following:
(a) Serve written notice on the licensee, which shall include:
i. Notice of the proposed action and the reasons for the action.
ii. Date, time and location of hearing on the matter and a statement that at the hearing licensee may present evidence and arguments on its behalf, confront witnesses and may be represented by a licensed attorney.
(b) Hold a hearing no earlier than 10 days after service of the written notice on the licensee. The hearing may be conducted by Council as a whole or by a Hearing Officer or Hearing Board appointed by Council for such purposes. If a Hearing Officer or Board is appointed, it shall be the Officer/Board responsibility to make a recommendation to City Council for the Council final review and decision.
(c) City Council shall make a written resolution as to its findings and determination and mail same to licensee and the Liquor Control Commission.

The original resolution before the council would have appointed, as a general principle, all members of the city’s liquor license review committee to a hearing board to make recommendations to the city council on decisions not to renew liquor licenses. The current three-member committee consists of Rapundalo, Anglin and Tony Derezinski (Ward 2).

The need to appoint a hearing officer or board was prompted by a Feb. 25, 2011 meeting of the council’s liquor license review committee, when the members recommended non-renewal of annual licenses for some on-premise liquor-licensed businesses. According to the city clerk’s office, those establishments are The Arena and Studio Four for tax issues, and the Fifth Quarter for being a public nuisance. If taxes are paid, the hearings for The Arena and Studio Four will be canceled. Live at PJs had been on the list, but they have since paid.

At the Sunday night council caucus the evening before, attended by Anglin, Sabra Briere (Ward 1), and Stephen Kunselman (Ward 3), Anglin mentioned the liquor license item to his council colleagues. He did not indicate that the proposal would change the following night to one where the liquor license committee could decide to appoint one of its members to serve as a hearing officer, or that he and Derezinski had apparently decided – at a meeting of the liquor license review committee not attended by Rapundalo – that Deresinski would serve as the hearing officer.

Liquor License Hearing Board/Officer: Council Deliberations

Anglin and Derezinski introduced the background to the resolution. Derezinski said the council would need to take action in April, based on the state’s process.

After Anglin indicated that Derezinski would be appointed as the hearing officer, Marcia Higgins (Ward 4) questioned whether his characterization of the resolution had been accurate. After comments from mayor John Hieftje and Derezinski, it emerged that Anglin had intended to make an amendment to the resolution. Higgins got clarification that the intent of the amendment was for Derezinski to serve as the sole hearing officer for the appeals.

Higgins said she had a problem with just one person serving as the hearing officer. She’d served “way back when” on a review committee, and said that the city attorney’s office at the time had recommended that the full committee review it. They’d wound up having a two-day “mini-trial” and that all three members had listened to it. She stated she was not in favor of having just one person hear the appeal. Higgins said she hadn’t heard a compelling argument for it.

Anglin added that the committee meeting where the issue had been discussed had been attended by the city clerk, the police department and the treasurer’s office.

Rapundalo said he had not attended the last committee meeting, and that he was puzzled by the idea that the hearings would be adjudicated by just a single hearing officer. He suggested that the more minds that are present, the better it would be. He said he thought the system they had in place was pretty effective, and that it had taken care of the more routine violations. For the more flagrant violations, however, Rapundalo felt that it would best serve the appellant to have as many people listening as possible, so they could come to a consensus or at least a majority view. He said he would not support the amendment.

At Hieftje’s request, city clerk Jackie Beaudry clarified that the outcome of the hearing would be a recommendation to the city council, and that the city council would make a final recommendation.

Derezinski argued that having just a single hearing officer would prevent deadlocks. At the last meeting, Derezinski said, Rapundalo had not attended – what would happen if the two members who were present could not agree? Derezinski contended that in administrative law, having one single hearing officer is a very common pattern. He also said that it’s a matter of administrative efficiency to have just one officer. He reiterated Beaudry’s point that the ultimate decision would come before the whole city council. Derezinski argued for the minimum due process that is required.

Rapundalo indicated that he could appreciate the issue of possibly deadlocking, but said it was far worse to have just a single hearing officer. He also questioned the efficiency argument, pointing out that the hearing would be part of the regularly scheduled meeting of the liquor license review committee on Friday.

Outcome on the amendment: The council voted 7-4 to amend the resolution to provide for a single hearing officer. Dissenting were Rapundalo, Higgins, Briere and Kunselman.

In light of the successful amendment, Higgins wanted to know if the hearing officer would be reporting back to the liquor license review committee so that the recommendation to the city council came from the committee. Derezinski told Higgins that the recommendation to the council would be coming from him sitting as the hearing officer. Higgins said the idea that the recommendation would be coming from a single councilmember gave her “great pause.”

Anglin asked for clarification about whether the hearing officer’s recommendation would be final. City attorney Stephen Postema told Anglin that the recommendation from the hearing officer would still have to come to the council.

Higgins asked if Derezinski was going to be providing all the information to the city council on which he’d based his recommendation, stressing again that it would be just the recommendation by one person. She felt she’d need to review the information in greater detail than she would if the recommendation were coming from the entire committee. She told Derezinski that she’d want all that information to be provided, because he’d be having the final say on something.

Derezinski responded, “It’s a final recommendation, and I’ll take that under advisement.”

Outcome on the resolution: The council voted 8-3 to provide for a single hearing officer to hear appeals on recommendations for non-renewal. Dissenting were Rapundalo, Higgins, and Briere.

DDA-Led Development

Before the council was a resolution that would have authorized the city’s Downtown Development Authority to create a parcel-by-parcel plan for the development of downtown city-owned surface parking lots. [.pdf of the resolution with the parcel-by-parcel plan] The council had also considered but postponed a vote on the proposal at its Jan. 18, 2011 meeting. At that meeting, objections to the proposal included “resolved” clauses in the resolution that would (1) require placement of items on the city council’s agenda; and (2) under some circumstances require the city to reimburse the DDA for its expenses.

At its Jan. 5 board meeting, the Ann Arbor DDA board had approved a resolution urging passage of the council resolution, which had been circulated as early as the city council’s Dec. 20, 2010 meeting, when Christopher Taylor (Ward 3) had attached a copy of the the draft resolution to the council’s meeting agenda, and alerted his council colleagues to it at that meeting.

DDA-Led Development: Parking Contract Background

By way of background, the development process for downtown city-owned surface lots is one of two main issues on which the council has been negotiating with the DDA board since June 2010. The other issue is a revision to the current contract between the DDA and the city under which the DDA manages the city’s public parking system.

Under the current contract – which runs from 2005 to 2015, with provisions for extending that term – the DDA owed the city a total of $10 million in “rent” of the public parking facilities for the 10-year period. The DDA fulfilled the $10 million obligation in the course of the first five years of the contract. Last year, the DDA unilaterally revised the contract to pay the city an additional $2 million. The “rent” payment is roughly two-thirds of the total amount of parking-related payments made annually by the DDA to the city. In the DDA’s FY 2012 budget, authorized last week by the DDA board, there is roughly $1 million allocated for payments to the city’s street repair fund and for the revenues derived from two surface parking lots not covered under the current parking contract.

During his communications time, Christopher Taylor (Ward 3) – who serves on the council’s “mutually beneficial” committee, which is charged with negotiating with its DDA board “mutually beneficial” counterpart – stated that “We have met most recently this morning …” [Neither Taylor nor fellow committee member Margie Teal (Ward 4) attended the meeting; Carsten Hohnke (Ward 5), the council's third committee member, arrived 40 minutes after the meeting's start. A meeting scheduled for a week prior had been canceled when councilmembers indicated they could not attend.]

At Monday’s council meeting, Taylor indicated that a draft of a new parking agreement had been received and reviewed. He described the discussions between the two committees as “frank” and “fruitful.” Taylor described how the two committees had been working towards an arrangement whereby the parking-related payments by the DDA to the city would be combined into a single sum, expressed as a percentage of the gross revenues to the parking system.

The percentage of gross that would reflect something close to what the DDA had been paying to the city over the last six years would be around 17.2%. In light of the immediate financial burden on the DDA that’s caused by its construction of the new underground parking structure, the city had proposed that the payment start off at around 16% for the first two years of the new contract, and then be increased to 17.5% after that. Taylor described that as the city taking a $300,000 “hit” over the first two years of the agreement. [The currently estimated gross parking revenues for the parking system are around $14 million.]

What was in the draft contract as the DDA’s counter proposal, Taylor said, was a payment of 14% for the first two years and 15% after that, which was an additional diminution of the payment to the city.

The 14-14-15 position on the DDA’s part and the 16-16-17.5 position on the city’s part had been fairly rigid for some time, Taylor reported. He said he was “daylighting” the circumstances in order that some flexibility be built into the budget planning that the city administrator would be doing in preparing a budget proposal in April. The council will vote on the budget in May.

[The status of the negotiations was reported by The Chronicle two months ago: "Parking Money for City Budget Still Unclear." Also previously reported by The Chronicle was city CFO Tom Crawford's stated strategy for handling a DDA payment that might fall short of the city's expectations – namely, to tap the city's general fund reserve. Crawford feels that the shortfall would not persist past the first two years of the contract: "Engaging the FY 2012 Budget."]

DDA-Led Development: Council Deliberations

In his opening remarks about the resolution, Taylor noted that the DDA appeared to be interested in creating a contractual, binding relationship – instead of working based on city council and DDA board resolutions – and in light of that he wanted to postpone the issue until the council’s first meeting in April. A draft of that contract has been provided to the council’s mutually beneficial committee.

The resolution before the council was not written to have contractual precision, said Taylor, and was not intended to place obligations on a party or give rights to another party. So he asked his colleagues to postpone the issue for four weeks, until the council’s first meeting in April. He said he was still in favor of the DDA performing the useful tasks as described in the resolution, but with the introduction of a contractual context, there needed to be additional time for consideration.

Marcia Higgins (Ward 4) noted that during the council’s Jan. 18 meeting, she’d argued forcibly about the DDA taking the responsibility as outlined in the resolution. She said she didn’t see any revisions that had been made to the document to accommodate her recommendations. She wanted to see a revised document. Taylor assured Higgins that her concerns had been noted by the committee.

Outcome: The council voted, with dissent by Sandi Smith (Ward 1), who also serves on the DDA board, to postpone their vote on the parcel-by-parcel DDA-led development plan until April 4, 2011.

Parks and Recreation Open Space (PROS) Plan

The council was asked to consider approval of the Park and Recreation Open Space (PROS) plan for the city. The plan provides an inventory, needs assessment and action plan for the city’s parks system, and is updated every five years – this version of the planning document covers 2011 through 2015. The updated document is required by the state in order for the city to be eligible to apply for certain grants. The deadline faced by the city council for approving the plan, to make the city eligible for state grant applications, is April 1.

The city’s park advisory commission recommended approval of the plan at its Feb. 15, 2011 meeting. The city’s planning commission also recommended approval at its Feb. 15, 2011 meeting. Several members of the public had weighed in on the plan at the meetings of those bodies as they considered the PROS plan. However, no one spoke at the formal public hearing before the city council on Monday night.

PROS Plan: Council Deliberations

Sandi Smith (Ward 1) had concerns over the justification for the way that land value is calculated in the plan, in the context of parkland donations.

By way of background, the city has a strategy in place to encourage parkland donation to the city by developers when new residential developments are planned – the city’s policy is to allow developers to calculate density of their development as if the donation of parkland had not taken place. The strategy serves the goal of maintaining the city’s ratio of parkland acres to residents.

Because some sites are so small that a donation of part of the site to the city as parkland isn’t feasible, the city offers a payment-in-lieu-of-donation program. From the PROS plan:

The average over the past five years has been approximately $12,000 per acre for greenbelt purchases, and for in-City parkland has been $200,000 per acre. If combined, the average cost for parkland purchase is $55,000. This number is used to calculate contributions in lieu of land.

Smith noted that the inclusion of land costs outside the city lowered the cost rather dramatically. She asked what the rationale was for that. She said she was hesitant to be a stickler about it and force the plan to be reconsidered by the planning commission. [This would likely have had the result of causing the state's deadline of April 1 to be missed.] Tony Derezinski (Ward 2), who serves as the city council’s representative to the planning commission, told Smith this had not come up during the planning commission’s discussions. He stressed that the commission had discussed the plan thoroughly – at least an hour and a half.

Amy Kuras, the city’s park plannner who oversaw the PROS update, noted that there is another place in the plan where she intended to update it after submission to the state – related to precise, current census data, which is not yet available. So the formula for calculating the payment-in-lieu costs could also be updated.

Derezinski thanked Kuras for her hard work on leading the plan’s five-year revision.

Stephen Kunselman (Ward 3) wanted to know what state grants the city was applying for. Kuras told him there were three: (1) Gallup canoe liveries; (2) a skatepark; (3) boat launches at Argo and Gallup.

Smith noted that the plan distinguishes plazas and smaller open spaces in the downtown area in the city’s inventory of parks – she was happy to see that included. Kuras noted that the issue had arisen in the Downtown Development Authority focus group – Smith serves on the DDA board. Kuras said that people downtown are not looking for soccer fields – for those who are looking for more suburban-style parks, there are some on the near periphery to downtown, Kuras concluded.

Mike Anglin (Ward 5) weighed in saying that he was 95% in favor of the plan but had some problems with it that would lead him to vote against it. He then read aloud a statement with objections, including issues with the proposed Fuller Road Station and public-private partnerships in the parks.

Mayor John Hieftje praised the work that had gone into developing the plan.

Outcome: The council voted to approve the PROS plan, over dissent from Anglin.

Complete Streets

Before the council was a resolution expressing its commitment to the concept of “complete streets” – the idea that streets should be constructed to accommodate a full range of users, from pedestrians, to bicyclists, to public transit vehicles, to privately owned automobiles.

The impetus for the city’s proclamation comes from the state of Michigan’s enactment in 2010 of Public Act 134 and 135, which amended the state’s planning enabling statute and the transportation funding law. The resolution is meant to make sure that Ann Arbor continues to qualify for state transportation funding.

In the resolution approved by the Ann Arbor city council, the city’s complete streets policy is described as including the city’s transportation master plan, the city’s non-motorized transportation plan, a city council resolution setting aside a percentage of Ann Arbor’s Act 51 funds for non-motorized transportation, and a policy that includes construction of non-motorized elements as part of each road construction project and requirements in the city’s public services standards.

At its March 1, 2011 meeting, the city’s planning commission briefly discussed the resolution that would be coming before the city council. Planning commissioner Erica Briggs had expressed some disappointment that the city wasn’t taking additional steps beyond what’s set by the state.

Complete Streets: Council Deliberations

Mayor John Hieftje said that the state legislature had used Ann Arbor’s local policies as a model for its state act, but that Ann Arbor still needed to convey formally its commitment to complete streets.

Outcome: The council voted unanimously to approve the resolution on complete streets.

Swift Run Stormwater Study

The council was asked to approve a $88,250 contract with J.F. New to conduct a study of the Swift Run drain system near the city’s composting facility. The study is prompted by a 2009 Michigan Dept. of Natural Resources and Environment (MDNRE) inspection. The inspection determined that a small pond near the northern compost pad required maintenance.

At that time, the MDNRE also requested improvements to the stormwater management system at the compost facility to reduce the impact of nutrient loading on the Swift Run drain. In 2004, the U.S. Environmental Protection Agency issued a Total Maximum Daily Load (TMDL) for biota in the Swift Run drain.

The concept behind the study is to examine the various interconnected ponds and ditches as a unified system, so that the MDNRE’s concerns can be satisfied. J.F. New was selected from seven engineering firms that responded to the city’s request for proposals.

Swift Run Stormwater: Council Deliberations

Stephen Kunselman (Ward 3) wanted to know why the project budget was $120,000 when the contract with J.F. New was only for $88,250. Craig Hupy, who heads the systems planning unit for the city, explained that city staff time would also be used for the project.

Outcome: The council voted unanimously to approve the contract with J.F. New for a stormwater study.

PACE Loan Loss Fund

Before the council was a proposal to set up a $432,800 loan loss reserve fund to support the city’s planned Property Assessed Clean Energy (PACE) program. The money for the fund comes from an Energy Efficiency and Conservation Block Grant (EECBG) awarded to the city by the U.S. Department of Energy (DOE).

Through its PACE program, which is still under development by the city, Ann Arbor will help property owners finance energy improvements through voluntary special assessments. By establishing a loan loss pool, the city can reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments. [Some previous Chronicle coverage of PACE: "Special District Might Fund Energy Program"]

PACE: Council Deliberations

Mayor John Hieftje noted that Ann Arbor would be moving faster than other communities on this kind of program and he would be happy to see it when it is in place.

Outcome: The council unanimously approved the creation of the PACE loan loss fund.

LED Streetlights

The council acted on a resolution to purchase 500 LED cobra head streetlight fixtures from Lumecon for $315,968. The city owns roughly 1,800 streetlights citywide – 1,000 downtown and 800 elsewhere in the city. [In the city, DTE owns roughly 5,200 of the streetlights.] The city has embarked on a program to replace the streetlights it owns with LED fixtures, which consume less energy and require less frequent bulb changes, thereby saving on maintenance costs. The purchase of the 500 LED fixtures would allow the city to complete the LED conversion of city-owned lights.

LED Streetlights: Council Deliberations

Sabra Briere (Ward 1) got clarification that the purchase was being paid for by a grant – from the U. S. Department of Energy. Marcia Higgins (Ward 4) got clarification that it’s just the heads, not the poles that will be replaced.

Outcome: The council unanimously approved the purchase of LED streetlight fixtures.

Communications and Comment

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

Comm/Comm: Fire Department

In his communications, Stephen Rapundalo (Ward 2) – who chairs the council’s labor committee – asked the city attorney to explore the legalities involved with a recent move by Allen Park, Mich. – that community had decided to send layoff notices to nearly its entire fire department.

In the city of Ann Arbor, the council had approved an expenditure to complete a fire protections services study at its Feb. 7, 2011 meeting after discussing the possibility at its budget retreats and work sessions of transitioning the department to a combined full-time/paid-on-call type department.

Comm/Comm: Library Lot

During public commentary reserved time, Alan Haber addressed the council on the topic of the future use of the city-owned Library Lot – the space that will sit on top of the Fifth Avenue parking structure that’s now under construction. He told the council he he hoped they were convinced that Valiant’s proposal for a hotel/conference center was not a good idea. He said that if Vivienne Armentrout’s analysis had not convinced them, then Chuck Skelton’s report should have. He said that while mayor John Hieftje had called West Park Ann Arbor’s Central Park West, what Ann Arbor needs is a Central Park Central.

Later in the meeting, city administrator Roger Fraser noted that the Library Lot RFP review committee would be meeting the following day. Stephen Rapundalo (Ward 2) also made note of the meeting on the following day.

[At that March 8 meeting, the committee voted unanimously to recommend to the city council to proceed with a letter of intent with Valiant, the developer of a proposal recommended by The Roxbury Group, a consultant hired by the city to evaluate responses to the city's RFP. There is now a city council work session on the letter of intent scheduled for Monday, March 14, starting at 7 p.m. at the Community Television Network (CTN) studios on South Industrial.]

Comm/Comm: Roger Fraser’s Replacement

At the conclusion of the meeting, mayor John Hieftje noted that Roger Fraser had previously announced his departure from the city to take a job with the state treasurer’s office. Hieftje said he wished Fraser the best. He said he’d met with mayor pro tem Marcia Higgins to discuss a transition process for moving ahead and that this recommendation would come before the council at its next meeting, on March 21.

Comm/Comm: Access to Basics

Thomas Partridge addressed the council twice during public commentary periods – at the beginning and the end of Monday’s meeting. He contended that the civil rights issues from the 1960s have still not been completely addressed and he called for greater access to affordable housing, transportation and education.

Comm/Comm: Palestine

Sol Metz told the council he’d been working a long time against the genocide of the Palestinian people, which he said began in 1948. He allowed that here locally, it’s difficult to have an impact on the issue. However, he noted that the mayor and councilmembers often attend an annual fundraiser held by the Jewish Federation, which he said helps fund the continued genocide of the Palestinian people.

He also noted that he was a member of an organization that had been the subject of a city council resolution that had condemned that organization’s activities. [The group to which Metz was referring demonstrates every Saturday outside a local synagogue, holding signs that typically call for actions like divestment of U.S. funds from Israel.]

When members of his group had addressed the council, councilmembers did not listen, he said, but instead worked on their computers. On one occasion, a councilmember had turned their back on the speaker. [The councilmember Metz meant was Joan Lowenstein, who no longer serves on the council. She had swiveled her chair around during the public commentary.] His group had asked for the city’s human rights commission to pass a resolution, but subsequently, that commission had been reorganized, he said.

Metz concluded by inviting the mayor and the council to attend a presentation on March 29, at 7 p.m. at the Malletts Creek Library.

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

Next council meeting: Monday, March 21, 2011 at 7 p.m. in the Washtenaw County administration building, 220 N. Main St., Ann Arbor. [confirm date]

The DDA will make  another work session presentation before the city council’s meeting on Monday, Nov. 15 – this one about the parking contract under which the DDA uses city-owned assets like decks, lots, and streets to manage the city’s parking system. The current $10-million contract runs through 2015. But the DDA has already paid the city $12 million on that contract, and the city wants an even better deal. Although it won’t be part of the parking contract language, the DDA sees the ability to take more leadership in the development of city-owned surface lots as part of the benefit it would get from a renegotiated parking deal with the city.

For the city, the parking deal is crucial for its budget planning for FY 2012. Already at its mid-October meeting, some city councilmembers began to raise questions about projections for FY 2012. The council must approve the FY 2012 budget this coming May. [The city's fiscal year begins on July 1 each year – the current budget year is FY 2011.] This past May, the city’s projected budget deficit for FY 2012 was $5 million, which already assumed an additional $2 million payment from the DDA.

There are likely enough votes on the 12-member DDA board to approve the new deal. And based on the most recent city-DDA discussions, the new arrangement is likely to take the form of a percentage-of-gross arrangement – 17.5% of gross parking revenues would be paid to the city.

But here’s a different way to describe the arrangement: The city of Ann Arbor would impose a 17.5% parking tax on downtown motorists. That is, downtown parking patrons will pay exactly 17.5% more to park than is actually required for the public parking system to sustain itself, in order that general fund revenues for the city of Ann Arbor can be supplemented.

And to derive support for the city of Ann Arbor general fund from the parking system, the DDA’s parking fund will operate at a greater deficit for the next few years than it would if the city honored the current parking contract. During that period, the DDA’s tax increment finance revenues – the amount it captures from other taxing authorities besides the city of Ann Arbor – will need to remain uninvested on behalf of the broader community. The unspent TIF fund balance will be able to offset the parking fund deficit, leaving the DDA still solvent, but barely so.

Two important questions have been ignored in the course of the city-DDA negotiations: (1) Is it appropriate to use non-city TIF funds – from the county, Ann Arbor District Library, Washtenaw Community College and Ann Arbor Transportation Authority – to offset the parking fund deficit caused by striking a new parking deal with the city? and (2) If the city’s public parking system generates more revenue than is required to operate and maintain it, what investment of that excess revenue would yield the greatest and best return for the community?

Background: Ancient History

At the start of the parking contract negotiations in the early summer, a term sheet with three key parking-contract-related items was intended to guide the negotiations between the respective “mutually beneficial” committees from the DDA and the city council: (1) a role for the DDA in enforcement of parking regulations; (2) a role for the DDA in enforcement of other non-parking city ordinances; and (3) increased services in the downtown area. But in late September 2010, it was apparent that these points would no longer be a part of the discussion.

The term sheet had been produced in late April 2010 by a “working group” of councilmembers and DDA board members that met out of public view and outside the committee structure established in the summer of 2009 by the DDA board and the city council to re-negotiate the contract. But the city council had first broached the subject of a new parking deal with a January 2009 resolution calling on the DDA to begin conversations about a revision to the contract. Why then? Sandi Smith (Ward 1), who serves on both the city council and the DDA board, had noticed that for the two-year budget plan covering 2010 and 2011, the city’s financial staff had penciled in $2 million in FY 2011 as a payment from the DDA. And Smith understood better perhaps than most of her council colleagues that the payment was not required under the city-DDA parking contract.

The 2005-2015 agreement specified a $1 million “rent” payment for each of 10 years, with the stipulation that the city could request up to $2 million in any given year, as long as the total did not exceed $10 million for the 10-year contract period. The city requested $2 million in each of the first five years, which meant that the $2 million penciled in by the city for FY 2011 was not required under the contract. Over heated objections by some members of the DDA board, the DDA approved the additional payment in May 2010, which was added to the city’s FY 2011 general fund budget. The extra $2 million was apparently analyzed by the board and the city’s legal counsel as a unilateral revision to the current contract. [Chronicle coverage: "DDA Oks $2 Million over Strong Dissent." Additional Chronicle coverage on this issue: "DDA-City Development Ideas" and "DDA: Dogged Enough for Development?"]

Background: More Recent History

If the three main points on the term sheet related to parking contract language were, by the end of September 2010, no longer part of the active discussions between the city and the DDA, what was the focus of their October conversations?

Recent History – Oct. 11 and Oct. 25

At the Oct. 11 and Oct. 25 meetings of the two mutually beneficial committees, the focus turned to revision of the existing parking contract, as opposed to introducing fundamentally different roles and responsibilities for the DDA. DDA board member Russ Collins acknowledged that really what was left to do was to clean up the language of the parking contract so that it reflects what is actually happening. He expressed some level of frustration, saying, “I don’t know how hard to beat this.” He characterized it as details that the city and DDA staff – Sue McCormick, public services area administrator for the city, and Susan Pollay, executive director of the DDA – would need to work through. As for the committee members, he wondered how much they really wanted to “flog” it.

One key change in the conversation that took place at the October meetings was a shift from $2 million to $3 million to characterize the amount of the money to be transferred annually from the DDA to the city. This was not a proposed increase, but rather a way to label the total parking-system-related fund transfer that the DDA currently makes to the city. In addition to the flat $2 million parking payment the DDA has made in each of the last six years, the $3 million figure includes an estimated $835,930 payment to the street repair fund, plus around $170,000 from the Fifth & William and 415 W. Washington lots. The city council asked the DDA to funnel revenue from those two lots to the city over the last year – requests to which the DDA agreed.

Grouping all the separate parking-system-related payments under a single dollar figure sets the stage for contemplation of a percentage-of-gross payment arrangement. Rather than basing the payments on a concept of “rent” for the city-owned assets in the parking system, the DDA would simply pay the city a percentage of its gross parking revenues. That single amount would replace the four separate payments now made by the DDA to the city.

Other key ideas introduced at the October meetings included the ability of the DDA to direct the allocation of some minimum fraction of the city’s community standards labor for parking enforcement activity. During the conversation around that topic, Sue McCormick observed that the DDA’s requests for coverage of specific enforcement times and areas would need to accommodate the scheduling of enforcement officers, which is governed by union contracts. The DDA would need to provide any direction far enough in advance that union staff can bid on the shifts they’d like to work.

With respect to enforcement areas, the contract will need to specify with greater clarity what specific geographic areas of the city will have parking managed by the DDA. For the FY 2011 budget year, the city began a program to install additional parking meters near the downtown, motivated by a desire to generate more revenue to the city – a move the DDA felt violated the current parking contract. However, the DDA did not mount a legal challenge at the time.

During October committee conversations, Sandi Smith was keen to see city enforcement staff included in DDA operations committee meetings on a regular basis. It would  allow them to provide the DDA with their perspective, as well as to give enforcement staff more insight into the DDA’s goals.

The notion of holding the city harmless for its enforcement activities drove much of the conversation at the October meetings. For example, if the DDA were to direct enforcement activities in a way that diminished parking fine revenues to the city, folks on the city’s side were interested in making sure the agreed-upon arrangement would hold the city harmless with respect to that diminished parking fine revenue. From the DDA’s perspective, if the city were guaranteed to be held harmless for any decrease in parking fine revenue, then the city would no longer have an incentive to staff parking enforcement at any particular level.

The DDA’s parking revenue does not include the fines that the city collects. The DDA’s parking revenue is restricted just to fees that motorists pay to park downtown. Currently, there are three basic parking rates, corresponding to three types of parking: on the street, surface parking lots, and multi-level parking structures. The DDA can make recommendations to change parking rates, which it can then implement unless the city council vetoes the changes. At the October meetings, DDA board member Roger Hewitt floated the idea that this council veto could be removed as a part of the new parking arrangement.

Part of the rationale for eliminating the council veto is based on the DDA’s transportation demand management (TDM) strategy for pricing. While there are currently three prices for the three types of parking, a TDM approach could possibly include a variety of different prices, based on geographic location and time of day. Those prices might well be adjusted with some frequency. The argument against a council veto is based partly on the logistics of getting city council approval for every proposed change in the TDM implementation. The two committees drew an analogy to the AATA bus fares, over which the city council does not exercise any discretion.

A percentage-of-gross payment arrangement with the city also serves to align the incentives of the city and the DDA on parking rates. Even if it had a veto power under a new parking contract, the city council might be less inclined to use it to block an increase, given that a parking increase would likely result in more revenue to the city. As Sue McCormick pointed out during the conversations, the percentage-of-gross arrangement also creates an incentive for the DDA to keep its direct parking costs down in a way that a percentage-of-net arrangement would not.

The Near Future

Based on the conversation at the Nov. 8  meeting of the committees, the key elements of the new parking agreement that the city council will hear from the DDA at its Monday, Nov. 15 work session will be the following:

• a payment from the DDA to the city expressed in terms of a gross percentage of parking revenue – 17.5%
• ability of the DDA to set parking rates for the system without veto power from the city council
• ability of the DDA to direct a minimum number of enforcement hours and regions to be implemented by the city’s staff
• a clear definition of the geographic regions of the city for which the DDA manages parking
• inclusion of city parking enforcement staff in DDA operations committee meetings.

The percentage-of-gross deal translates in the first few years into roughly a $3 million annual payment to the city from the DDA, which approximates what the DDA has paid the city each year for the last six years. In later years it will be even more. [In addition to the $2 million payment that is likely familiar to readers, the DDA has also paid an escalating amount into the city's street repair fund, estimated at $835,930 in FY 2012, and has committed revenues from the 415 W. Washington and Fifth & William surface parking lots, anticipated in FY 2012 to be $73,549.]

Numbers: Non-City Taxing Authorities

The negotiations between the city of Ann Arbor and the DDA over the parking deal aren’t really between two isolated parties. Those two entities each represent us – in different ways. The city of Ann Arbor is not representing itself – rather, it represents the interests of Ann Arbor taxpayers. The DDA is not representing itself – rather, it represents the interests of a broader community of taxpayers and taxing authorities besides the city of Ann Arbor: Washtenaw County, Ann Arbor District Library, Ann Arbor Transportation Authority and the Washtenaw Community College.

The DDA captures a portion of the taxes that would otherwise go to these other taxing authorities in the same way that it captures a portion of city of Ann Arbor taxes. Specifically, the DDA captures those other authorities’ taxes on the incremental increase in taxable value in the first year that improvements are made to property inside its district. The DDA does not capture taxes on the base taxable value of properties before the authority was created, nor does it capture taxes on the appreciation that accrues to properties after they have been improved.

The conversation between representatives of the city and the DDA has focused on a way to sustain the current habit of parking-system-related payments from the DDA to the city. The idea of a 17.5% of gross payment is a rough approximation of the continuation of this habit.

In the table below, the first column reflects what the DDA would pay the city if it continued to make payments the way it has for the last six years. It’s worth pointing out that if the DDA and the city honored the current parking contract, every number in the first column of dollar figures would be reduced by $2 million. The second column is the amount of gross revenue the DDA expects to see from parking fees. The final column is the difference between a 17.5-percentage-of-gross arrangement and continuation of the pattern of the last six years. [Parens indicate negative amounts.]

        Transfer        Parking          17.5%          Gross
YEAR    Habitual         Gross         of Gross      Minus Habit 

2012    3,006,650      16,162,753      2,828,482     (178,168)
2013    3,042,916      17,471,502      3,057,513       14,597
2014    3,080,633      18,142,709      3,174,974       94,341
2015    3,119,858      18,914,835      3,310,096      190,238
2016    3,160,652      19,830,701      3,470,373      309,720
2017    3,203,079      20,410,989      3,571,923      368,845
2018    3,247,202      21,008,666      3,676,517      429,315
2019    3,293,090      21,721,400      3,801,245      508,155
2020    3,340,813      22,358,347      3,912,711      571,897

-

The DDA considers the initial lower number in the first year – compared to what the DDA would pay the city based on recent habit – as an accommodation by the city.

Numbers: A Greater Deficit

What the city-DDA conversation has mostly left out, however, is something that finally began to surface at the most recent meeting of the mutually beneficial committees on Nov. 8: On any scenario of continued payments to the city by the DDA, the DDA’s parking fund is projected to operate at a greater deficit for the next few years than it would without the payments. Some deficit was expected, based on the major capital projects of the Fifth Avenue underground parking structure and the Fifth and Division streetscape improvements that the DDA is currently undertaking.

To understand how the DDA plans to operate its parking fund at a deficit, but remain solvent, it’s useful to understand that the DDA’s budget has two sources of revenue that are reflected in four different funds. The DDA’s TIF fund receives revenues from tax increment capture, and the housing fund in turn receives transfers from the TIF fund. The parking fund receives revenues from parking fees, and the parking maintenance fund in turn receives transfers from the parking fund. One way to determine whether the DDA is solvent is by summing the fund balances in each of the four funds: parking, parking maintenance, TIF, and housing.

In the table below, based on DDA numbers, the first column of dollar figures are the combined totals for the DDA’s parking and parking maintenance funds, based on the assumption that the DDA continues payments as it has over the last six years. The second column shows what would happen to the total fund balance if the TIF capture were limited to just the city of Ann Arbor portion of the taxes [calculated here at 60% of the total capture]. The third column shows projected total fund balances including all of the TIF. The final column expresses the projected total fund balance as a percentage of operating expenses.

       Sum of      All-Fund               All-Fund
YEAR    Prkng     Minus Non-A2  All-Fund  Pct of Exp

2012  (2,671,482)    710,158    2,845,806   14%
2013  (4,905,587)   (961,323)   1,677,918    8%
2014  (5,258,327)   (366,072)   2,958,326   14%
2015  (5,686,041)    176,987    4,212,498   20%
2016  (4,865,390)  1,983,142    6,755,310   31%
2017  (3,356,114)  4,578,286   10,113,783   46%
2018  (1,639,545)  7,418,378   13,743,203   63%
2019     (89,453) 10,114,738   17,256,302   77%
2020   2,792,616  14,199,517   22,185,382  100%

-

The first column of dollar figures shows that the parking funds, taken together, are projected to operate at a deficit through 2019. But the third column assures us the DDA is projected to remain solvent. Solvency is being achieved with projected TIF revenues – taxes collected from the city of Ann Arbor and other taxing authorities. What happens when we strip away the TIF dollars that are captured from non-city taxing authorities? That’s what the second column shows.

That’s the column that should be troubling to county administrator Verna McDaniel, Ann Arbor District Library director Josie Parker, Washtenaw Community College president Larry Whitworth, and Ann Arbor Transportation Authority CEO Michael Ford. The column demonstrates that the TIF captured from their public bodies is the only thing that will keep the DDA solvent in 2013 and 2014. The negative amounts in those years would disappear, if the city and the DDA honored the current parking contract.

It’s difficult to escape the conclusion that the material effect of the proposed new parking deal is this: Non-city TIF capture will be used as a means to add to the general fund budget of the city of Ann Arbor.

A Pause on Investment of TIF?

We’ve seen that some non-city TIF capture will need to sit uninvested in the broader community for a few years, because it’s needed in the short term to offset deficits caused by the renegotiated parking contract between the DDA and the city.

It was, of course, the DDA’s intent to use the TIF fund balances to offset the deficits in the parking fund. These were deficits that were anticipated to be caused by its major construction projects as well as other parking fund activity. That activity includes funding the go!pass program, which offsets bus fare costs for downtown employees. For these kinds of efforts, there is a narrative the DDA can tell to non-city taxing authorities about why parking decks or streetscape improvements downtown are worth using their TIF to support.

What other kinds of investments in the broader community will the DDA need to put on hold, in order to renegotiate the parking contract with the city? Two examples of programs the DDA’s current 10-year plan does not project continuing are its energy-saving grant program and the go!pass program. The go!pass program has funding authorized through 2013 – $540,060 for that year, but after that, the DDA’s 10-year plan assumes no funding for go!pass.

The DDA’s partnerships committee meeting on Wed., Nov. 10 also gave a glimpse into what might become a pattern in the next few years: Organizations apply for grants that are consistent with the DDA’s mission, which the DDA cannot afford to approve.

Last Wednesday, the DDA partnerships committee discussed a grant request from the Ann Arbor housing commission – a 50% match on a $1 million federal grant it has received to make capital improvements to Baker Commons, one of the commission’s downtown properties. The committee also entertained discussion on an additional grant to the Washtenaw Shelter Association for the Delonis Center. The DDA board had previously authorized $218,050 worth of improvements to WSA, while holding in abeyance the approval of more than $113,210 for installation of solar panels and for computer hardware at the shelter. Susan Pollay, executive director of the DDA, told the committee on Wednesday that her understanding was that given a choice, the WSA would prefer to see the new computers funded. The outcome of the committee’s deliberation was not in favor of either the housing commission’s or the shelter association’s proposal.

Tony Derezinski – one of two city council representatives to the DDA’s partnerships committee, who is also the liaison from the city council to the Ann Arbor housing commission – was able to coax an “undecided” determination out of the committee, as opposed to a no.

At the partnerships committee meeting, DDA board member Russ Collins linked the housing commission grant to the ongoing “mutually beneficial” discussions between the DDA and the city on the parking agreement. He noted that affordable housing was a city goal and would benefit the city, and therefore should perhaps be part of the context of the mutually beneficial discussions. That sentiment found an unwelcome reception with Margie Teall – a member of the city council who serves on the mutually beneficial committee and as a city council representative to the partnerships committee. She wondered what other projects Collins would want to include in the mutually beneficial discussions. She was implying it would be unreasonable to include the housing commission grant or any other similar projects in those discussions.

Collins’ suggestion also found little resonance with his fellow DDA board member John Splitt, who stated that part of what the DDA did was make investments in city-owned assets, and that the housing commission request was therefore no different than other DDA projects that involve investments in the city’s assets – Fifth and Division improvements, parking decks and the like.

It’s unlikely that the housing commission grant will be looped into the parking agreement discussion. But it’s clear from this partnerships committee conversation, as well as from the raw numbers, that the DDA will not be able to afford investments it would otherwise make, if the parking deal were not being renegotiated to the benefit of the city of Ann Arbor’s general fund.

Possible Solutions: Maintenance, Repair?

At the Nov. 8 meeting of the mutually beneficial committees, there was some recognition on the city’s side that the DDA is going to face a tough financial situation over the next few years.

Sue McCormick, looking at the healthy projected TIF fund balances over the next decade, suggested making the street repair payment out of the TIF fund instead of the parking fund. Joe Morehouse, deputy director of the DDA, pointed out that the number in the spreadsheet they were trying to improve was the sum of the TIF and the parking fund balances – transferring the amount to the city from one fund or the other wouldn’t change the bottom line. The DDA’s Roger Hewitt was also quick to cite policy grounds for not paying the city directly out of the TIF fund.

At that same meeting, Christopher Taylor, who serves on the city council’s negotiating committee, suggested deferring the annual $2 million transfer from parking fund into the maintenance fund for  a couple of years. It’s troubling to see public officials even thinking along these lines, much less expressing this idea out loud, given the city’s specific history with deferred maintenance on parking structures. The historical failure of the city to perform routine maintenance on the parking structures, and the structures’ subsequent deterioration, is what led the city to hand off the parking operation to the DDA in the early 1990s.

The general area of maintenance and street repair is actually a place where the city of Ann Arbor has some room to extend a helping hand to the DDA. Prior to the award of the $14 million TIGER II grant to the city this fall, the city had a contingency plan for funding the replacement of the East Stadium bridges completely out of local street repair millage funds. The influx of federal dollars frees up local street repair funds to be spent on repair of local streets – which is what they’re collected for. But it would also mean that the DDA’s roughly $800,000 annual payment to the city’s street repair fund is  far less crucial to the city’s ability to fund necessary street repairs than it was before the award of the news of the federal TIGER grant. It’s an area where the city is in a position to be generous to the DDA.

Central Questions: Use of TIF, Use of Parking Profit

In the course of the negotiations between the city and the DDA, the focus on two important questions has been lost: (1) Is it appropriate to use non-city TIF fund balances to offset the parking fund deficit caused by striking a new parking deal with the city? and (2) If the city’s public parking system generates more revenue than is required to operate and maintain it, what investment of that excess revenue would yield the greatest and best return for the community?

It’s a step forward if the preceding presentation of the numbers has at least established that question (1) is an actual question warranting an answer: It’s not a what-if scenario – it’s the situation we actually face.

It’s a question that appropriately falls to representatives of Washtenaw County, the Ann Arbor District Library, Ann Arbor Transportation Authority and the Washtenaw Community College to answer. One kind of answer I would anticipate from Leah Gunn – who serves on the DDA board as well as the county’s board of commissioners – is that this use of the TIF is appropriate, because a financially healthy city of Ann Arbor is essential to the health of the entire region. It’s a point of view that is not without some merit. However, there could be others at the county, or elsewhere in the community, with a different view.

For my part, it’s the second question that is more intriguing. Built into the question is an assumption that it’s not wrong to charge people more for parking than it costs to maintain the parking system. [The debate on that assumption is one I'm simply skirting.]

The question of how excess parking revenues should be spent is a pure public policy question, that is not necessarily contingent on who gets to make the public policy choice. But the negotiation between the city and the DDA has focused the public’s attention on the “who” of the policy choice, instead of the choice itself. The “who” making the choice is in some sense a surrogate for the how we feel about the choice itself.

The city’s choice is that excess parking revenues should support the general welfare – no specific item in the general fund is specified. The DDA’s choice is somewhat more specific in identifying investments in the parking/transportation system. So when the DDA spends excess parking revenues on bus passes for downtown workers, it does make some kind of rational sense – because that’s cheaper than building parking spaces for those workers.

But what I’d like is something even more specific. I’d like to be able to say to a motorist who’s effectively paying a parking tax: Here’s exactly what that tax is going to buy for the benefit of our community. I’d like to identify a specific transportation project that our “parking tax” revenues will fund. Is it a mono-rail in the Plymouth-State street corridor? ["Transit Connector Study: Initial Analysis"] Is it street cars for the Washtenaw Avenue corridor? Or is it an enhanced on-demand paratransit service to help people get around town without a car?

Another way of putting that: I’m looking for our elected officials to integrate a plan for excess parking revenue into the AATA’s current effort to develop a countywide transit plan. ["AATA Continues Push for Master Plan Input"]

The city and the DDA will likely ratify the new parking deal sometime before the city’s FY 2012 budget is approved next May. I’m not optimistic, but I’m looking to my elected representatives at the city for a better effort to break the cycle of addictive behavior they’ve displayed historically towards using parking revenues to subsidize the city’s general fund. Dipping into excess parking revenues to aspire to solvency is just not good enough. I want it invested in something special, something great, something that will make Ann Arbor better than what it is, not just better than other cities in Michigan.

During the retreat, DDA board members marked up a poster-sized version of the DDA enabling legislation using a pink highlighter, undeniably a funky color. (Photo by the writer.)

Wednesday morning’s retreat was meant to focus on the role of the DDA in future development of the downtown area and the role of the DDA in parking enforcement.

The outcome of the retreat was essentially that the DDA is interested in cleaning up various aspects of the parking agreement language, but not in pursuing a role for the DDA in the enforcement of parking regulations. Further, greater support was expressed for the DDA as a facilitator of process, rather than as a driver of development through land acquisition and sale.

Wednesday’s retreat was the third one of the year for the board. Two of them have focused specifically on a revision to the city-DDA parking agreement to provide for additional payments to the city by the DDA.

The board retreat in May of this year had been convened as the board’s “mutually beneficial” committee (MBC) prepared to begin negotiations with the city based on a term sheet with four key elements: (i) a role for the DDA in enforcement of parking regulations, (ii) a role for the DDA in enforcement of non-parking code violations, (iii) provision of services in the downtown area by the DDA for the city, and (iv) a role for the DDA as a development engine for downtown city-owned surface parking lots. [For Chronicle coverage of the May retreat, see: "Ann Arbor DDA: Let's Do Development"]

Now that the two committees have met several times through the summer, the DDA board decided at its Sept. 1 meeting to convene another retreat to give its committee some additional direction as the negotiations grind towards an Oct. 31, 2010 target for a completed new parking agreement. In the course of the summer meetings, elements (ii) and (iii) – non-parking code violations and provision of downtown services by the DDA – have dropped out of active discussion.

And a role for the DDA in parking enforcement seemed to have been pushed nearly off the table at the second joint meeting of the committees in August [See Chronicle coverage: "DDA Parking Enforcement Prospects Dim"]. But from the point of view of its technical feasibility, DDA parking enforcement was resuscitated as a possibility at the first committee meeting in September.

The part of the summer talks that had seemed to resonate most among DDA board members and city council members on the two committees was this: The DDA would take greater responsibility than it currently has for the development of city-owned downtown surface parking lots. [The most recent Chronicle coverage of those talks: "DDA-City Development Ideas"]

Based on discussion at the August partnerships committee meeting of the DDA and the DDA’s Sept. 1 meeting, there was interest among DDA board members in exploring land purchase – which would need approval by the city council – as one mechanism for the DDA to execute a development strategy. That strategy would depend on a process that would build on work done in the community over the last half decade. [.pdf of the current proposal for a DDA-led process]

But Wednesday morning, board member Gary Boren summarized for his colleagues his view of the way the negotiations over the summer had progressed. He drew a comparison to the early days of the League of Nations, when some negotiations had been described as appearing from the outside as if very little was happening – but when you scratched the surface, you saw that absolutely nothing was happening.

How Was The League of Nations Like the DDA?

At Wednesday’s retreat, DDA board member Gary Boren introduced the reference to the League of Nations reluctantly, he said. It came in the context of the DDA’s MBC members’ initial report out to the whole board on how the city-DDA negotiations had progressed. Boren is a member of the DDA’s MBC.

The Chronicle tracked down the specific reference Boren likely meant in a March 7, 2003 volume of the Congressional Record. The Congressional Record reports the remarks of Senator Warren Hatch, who quoted Secretary of Defense James Schlesinger, who cited a reporter’s summary [emphasis added]:

Will the United Nations prove as feckless as the League of Nations? Mr. Chairman, in 1935, Mussolini invaded Abyssinia. The League of Nations took note of this challenge to international order. Day after day, week after week, the League deliberated what to do. These sessions went on endlessly. After each session, there was a press conference. After some weeks, one of the reporters summarized the situation as follows: “On the surface, very little is happening – but beneath the surface, nothing is happening.”

As the chuckles from fellow board members faded, Boren stated that he was disappointed with the progress of the city-DDA talks. He noted that most recently, the talks had focused more on the idea of the DDA serving as a development engine for the downtown. He acknowledged that Carsten Hohnke (Ward 5) and Christopher Taylor (Ward 3) – members of the city’s MBC – had indicated they are receptive to the idea. He wondered, however, how significant the DDA’s role would be: Would it simply be “window dressing” or would it provide the DDA with “significant development muscle”?

DDA’s Development Role

Woven throughout the discussion at the retreat were different attitudes about what is meant by the word “development” in the DDA’s middle name and what specific role the DDA should play in that. On one end of the spectrum was a view – espoused by board member Newcombe Clark – that is focused on the development of real estate, and sees the DDA as the entity to manage that development through the acquisition and sale of real property.

In their discussion at the retreat, board members acknowledged the political dimension to the nature of downtown development in Ann Arbor, and based on that consideration, seemed reluctant to given their support to the strong version of the DDA’s role envisioned by Clark. They were, however, content to let the DDA “take the heat” and “provide political cover” for elected officials to absorb some of the community criticism that could arise against specific proposals.

At the other end of the spectrum discussed by the board was a somewhat broader definition of “development” than development of real estate, extending to include “economic development.” This was a view espoused most energetically by board member John Mouat.

In the end, there seemed to be a consensus that the role for the DDA in development would be described best with words like “facilitate” and “assist,” not “manage,” “drive,” “oversee,” “control” – and especially not “commandeer.”

DDA’s Development Role: Significant Muscle

Advocating most specifically for the idea that the DDA should have a role in downtown development with significant muscle was Newcombe Clark. His enthusiasm was clear for the idea that the DDA should include not just city-owned surface lots in its downtown development strategy, but also lots owned by other parties – the county, for example.

Clark described how the DDA needed a willing seller of land to demonstrate that it is competent to develop real estate. Part of convincing the city of Ann Arbor to be a willing seller – which could provide a “clean and legal way” for the DDA to funnel money to the city of Ann Arbor’s general fund – could be a demonstration of the DDA’s competence with other parcels, he suggested.

Clark asked his fellow board members to consider a hypothetical situation where Google decides that in order to maintain its presence in Ann Arbor, it needs a new building. If the DDA had a few surface parking lots under its control, it might have the flexibility to solve that specific problem, he suggested. In the interim, those surface parking lots would continue to generate some revenue.

Another specific kind of suggestion mentioned by Clark is essentially now out of play – because the dirt currently being excavated for the underground parking structure is, according to Clark, being sold to a fill dirt broker. The idea, Clark said, was to look at the former MichCon property north of the Broadway bridges and use the excavated dirt as part of the environmental cleanup that would be required before that property can be developed.

Sandi Smith, who serves on the city council as well as the DDA board, stated that she did not think the DDA needed to focus on purchasing land, but rather more on mapping out the downtown critical assets and helping to broker properties. She stated that she was comfortable with the DDA as a “facilitator of process.” She said she was “less comfortable with the DDA commandeering a site and putting out an RFP,” referring to a request for proposals.

Smith did draw out the fact that the sale of public land within the DDA district – with zero taxes currently collected – meant that after a transfer of ownership and taxes began to be assessed, all the city taxes on the property would be captured through the DDA’s TIF – all other things being equal. However, it was pointed out that an adjustment in the amount of future TIF capture could be made a condition of the sale – lest the city of Ann Arbor be concerned that the only benefit to the transaction would be the sale price, with future taxes simply padding the DDA’s TIF.

Mayor John Hieftje, who serves on the DDA board, indicated that he did not imagine the city council would agree to sell land to the DDA. Roger Hewitt also said he didn’t see the city council selling public land without knowing what’s going to go there.

Russ Collins, for his part, noted that there was virtue in the DDA’s ownership of the land as a way to overcome political obstacles.

DDA’s Development Role: Impact of Politics

As the board discussed the role of the DDA in development – whether it is “community development” or “economic development” or “real estate development” – John Mouat characterized most of the board as “somewhat pro-development,” but noted that a lot of people in the community don’t feel that way. Things don’t always work very well for developers, he said.

Current board chair Joan Lowenstein asked how the political roadblocks could be avoided that the DDA had experienced in the past. Although Lowenstein did not cite the 3-Site Plan specifically as an example of that, Russ Collins did bring it up. Regarding the DDA’s  3-Site Plan, Collins noted that it was stopped by a political process.

By way of background, 3-Site Plan was a 2005 effort to develop city surface parking lots, including lots at First & William, First & Washington and the Kline’s lot – on the east side of Ashley Street, between William and Liberty. The concept underpinning of the 3-Site Plan was that parking could be decoupled from development – build a parking structure at First & William and free up the other two sites for development without the constraint of building on-site parking.

The 3-Site Plan was never voted on by the city council. The site at First & William provoked controversy that continued through most of 2005 when supporters of an Allen Creek greenway objected to the use of that parcel for a parking deck.

The political process to which Collins alluded was one that saw city councilmembers declining to put the 3-Site Plan on their meeting agenda for a vote in early 2005, just after the city-DDA parking agreement was signed. DDA board members at the time apparently believed, based on information they received from city councilmembers, that there were sufficient votes on the council early in 2005 to approve the 3-Site Plan. But councilmembers apparently wanted additional time to lobby to ensure that the vote was more decisive than 6-5 on the 11-member body.

Later in Wednesday morning’s discussion, Newcombe Clark said the DDA needed to be able to “take the heat” and that if they “freak out because we don’t have complete unanimity, then we don’t move forward.”

Russ Collins suggested that in connection with the Delonis Center – the homeless shelter on Huron Street which was spearheaded by the county – Bob Guenzel could attest to the fact that not all projects have unanimous support from start to finish. [Guenzel, the recently retired former Washtenaw County administrator, was appointed and confirmed by the city council last month as the DDA board's newest member. He replaced Jennifer S. Hall on the board.]

Guenzel weighed in just once during the 3-hour meeting, saying that he thought the proposed plan for a development process the two MBCs were exploring showed “tremendous vision” and stressed the importance of identifying both the available properties as well as the need for land and building space. The question, he said, was whether the process was good enough that the city council will approve it – there has to be a partnership with the city, he concluded, where the city has “buy in.”

Joan Lowenstein suggested that a long-term strategy can’t rest purely on city councilmembers, because they serve two-year terms. Roger Hewitt suggested that the development of a long-term strategy could only emerge incrementally – the DDA could not go off and work “in a cave somewhere” isolated from everything, and then bring forth some proposal.

For his part, mayor John Hieftje said at the retreat that whether there is public support for a project depends on what you try to do. In Ann Arbor, he said, the public has a strong voice. If a project is perceived as a benefit, then support is “cut and dry.” On the other hand, if the public perceives a project as planned to be “big and ugly,” then the developer needn’t bother.

Hieftje also said that elected officials tend to hear from a very narrow segment of residents – the council hears from the same individuals over and over. He implied a contrast between those individuals and the general public, by posing as a question: How do we educate the general public about what we’re doing?

Leah Gunn appeared to concur with Hieftje’s assessment of the public’s voice, saying that from her experience most public enthusiasm tends to be against something as opposed to for something. But she noted that Hieftje’s support among voters is obvious. [He outpolled Democratic primary challenger Patricia Lesko in August by an 84% to 16% margin.] It’s a noisy, loud crowd, she said, but does not represent the vast majority of people.

Board member Newcombe Clark – who is running independently for the Ward 5 city council seat currently held by Democrat Carsten Hohnke, and is joined in that race by Republican John Floyd – responded to Gunn and Hieftje’s remarks by asking: “Why let a vocal minority hold back a city of over 100,000 people?” Later in the discussion, Hieftje characterized Clark’s sentiments as a call to “ignore the public,” which Clark said was an attempt by the mayor to put words in his mouth. Clark did eventually say that he did ignore those people who always say no and never offer any alternative.

Hieftje indicated that he did not believe that city councilmembers base decisions on whether they’ll be re-elected or not, but rather based them on the interest of the whole public, including everyone. Clark attempted to counter that idea based on the fact that the DDA’s recommendations on the A2D2 rezoning plan had not been incorporated in the package that the city council approved last year.

DDA’s Development Role: Facilitator of Economic Development

Fitting into the idea of economic development was Clark’s allusion to the hypothetical example of the DDA helping retain Google by being in a position to develop specific real estate parcels. But other board members seemed to indicate an interest in seeing the DDA pursue economic development through means other than construction of new buildings. “‘Development’ is a tricky word,” said John Mouat, “There’s building buildings, and then there’s economic development.”

Keith Orr suggested that one role the DDA could play would be to provide “political cover” as well as help to market a development strategy. There seemed to be a general consensus that the DDA would be the “point of the spear” without necessarily being in control of the spear’s handle.

Sandi Smith indicated that the DDA’s role might not be to control, but rather to facilitate. The DDA role would not be to find companies and attract them to Ann Arbor – that’s more the role of Ann Arbor SPARK – but rather to facilitate or broker existing properties. As part of developing a more comprehensive vision, instead of a one-parcel-at-a-time approach, she suggested grouping various of the city-owned lots into “zones.”

Mouat, for his part, was not telling his fellow board members anything they hadn’t already heard about his view of the DDA’s role in economic development. At the board’s May retreat, Mouat had this to say:

Mouat suggested that they marshal their energies in the area of “economic development” – attracting businesses, attracting the next Google, and other start-up companies. Mouat said he felt like it would be a more exciting and palatable way to approach development. The vision should go beyond a building being built. A developer putting up a building on speculation had not been very successful in Ann Arbor. He suggested banding together with SPARK – the area’s economic development agency – and other organizations and figuring out what niche the DDA might fill in that world. …  he didn’t think it was as simple as growing the TIF or just economic development. It had to do with vibrancy and attracting young people and making Ann Arbor the best place it can be – a cool downtown, he said.

DDA’s Development Role: Coda – Big Dogs, Small Dogs … Funky Dogs

Commenting on some of the political issues involved with development in Ann Arbor, Russ Collins cited a marketing phrase used by the nonprofit Think Local First: “Keep Ann Arbor Funky.” He suggested that typically it was meant indicate that Ann Arbor was unique, creative, new and eccentric. But he noted that it also carried with it the meaning of being “just a little dysfunctional.” Sandi Smith chimed in that a third, additional meaning could be “It’s perfect the way it is.”

Although it did not occupy much of the discussion, the impact that the University of Michigan plays in the community did make mention. John Mouat reminded his colleagues that the DDA was a “little dog” compared to the city, which is a “medium dog.” The “big dog,” he said, is the university. Joan Lowenstein acknowledged that UM needs to be involved in the process, citing the previous participation of people like Doug Kelbaugh and Robert Beckley, both former deans of UM’s Taubman College of Architecture and Urban Planning.

The Parking Enforcement Part of The Contract

At the retreat, there seemed to be little enthusiasm to pursue a role for the DDA in parking enforcement. At the most recent MBC meeting, fresh statistics had been made available on the revenue generated by parking tickets. From Chronicle coverage of the Sept. 13 meeting:

The five-year trend for monthly tickets issued is decidedly downward. Almost five years ago, 11,000 tickets were issued in a month, but in the last year around 6,000 tickets have been issued per month. In the most recent month for which data was available at the meeting, January 2010, only 4,647 tickets were issued. Fewer tickets means less revenue: In FY 2006 around $2.1 million was collected in parking ticket revenue, but in FY 2010 that fell to around $1.1 million. Commented Russ Collins: “It’s hard to see the business case for the DDA taking this over.” However, Sue McCormick indicated that the lower numbers are due in part to lower staffing levels for community standards officers, who write parking tickets. The city currently has two community standards vacancies, she said.

And at Wednesday’s retreat, Collins’ skepticism about the business case for the DDA was shared by others. Leah Gunn talked about a vision of Ann Arbor with no parking tickets. Joan Lowenstein and Roger Hewitt seemed persuaded that advances in parking technology – sensors embedded in pavement and the like – would mean that parking policies would be driven by that technology.

Keith Orr, whose biography includes a chapter as a computer programmer, cautioned that assuming technology is the answer is often a mistake – it changes the nature of work, but it doesn’t eliminate the work. Orr, however, noted that from his perspective [not sitting on the DDA's MBC], there appeared to be little movement during the MBC talks on the part of the city towards embracing the idea of the DDA taking a role in enforcement.

Collins advised that it was not a matter of movement, but rather that they’d learned that for the DDA to be involved in enforcement of parking regulations, it would be “very complicated.” In that case, said Orr, it did not make sense to continue “butting our heads against the wall.” There seemed to be more excitement, said Orr, about being a development authority than being a parking authority.

Newcombe Clark cautioned that if the DDA walked away from trying to take a role in the enforcement of parking because it’s complicated, then he wanted them to understand that developing real estate was much “deeper and murkier” and complicated than the enforcement of parking regulations.

At Wednesday’s retreat, John Hieftje expressed the same view that he’d expressed at a July 6, 2010 city council working session [Hieftje, as mayor, serves on the DDA board as provided in the enabling state legislation]:

Mayor  John Hieftje expressed concern that they were starting to talk about two different enforcement entities operating in the downtown area. He said that based on conversations with the deputy police chief, he thought it would be much easier to train the current community standards officers who do parking enforcement to implement enforcement in the specific ways that the DDA had in mind – to make them “ambassadors” for the downtown. He said that it made sense to invest in training the people we already have.

Based on the declining number of citations and the declining number of tickets issue, there seemed to be little enthusiasm in the room for the DDA to take over enforcement of parking regulations.

Board member John Splitt asked Susan Pollay, the DDA’s executive director, if there was any benefit to formalizing some kind of customer-service arrangement with respect to parking enforcement and other code violations between the city and the DDA. Pollay indicated that when the city retains all authority, they are at the center of all the contracts.

As an example, Pollay cited the arrangement the Ann Arbor Transportation Authority has with the Ann Arbor police department for a patrol officer to monitor the Blake Transit Center downtown. The officer can be pulled off that duty by the city for a number of different reasons, Pollay said.

Pollay stressed that it’s not just a matter of having a friendlier person enforce the parking but rather a matter of having an overall parking strategy. As an example, she noted that when the DDA first moved its offices to the 303 Detroit St. Market Place building in Kerrytown, they heard from fellow tenants that one of the “perks” was free parking at the nearby Farmers Market. Pollay said that apparently there’d been complaints from people who’d received tickets and that there were issues with finding spaces for Farmers Market vendors to park. The outcome was that parking was not enforced in the area, she said – no one was managing the parking enforcement strategy. She concluded that it was not about having “a nicer person” hand out the tickets.

Hewitt indicated agreement with the idea that the DDA would not pursue a role in parking enforcement. Instead, the city’s community standards officers would be trained to implement a customer-friendlier approach, and to be the eyes and ears on the street. Still, Hewitt expressed skepticism about Hieftje’s idea that city staff can be retrained to get the same result – if someone is not reporting directly to you, you don’t get  the same level of customer service, said Hewitt.

Lowenstein summarized that the MBC would continue to work on clarifying the parking agreement – without including the idea of the DDA taking on enforcement of parking regulations.

The Contractual Part of the Contract

Among the items that need to be cleaned up in the parking agreement are topics like the actual amount of money the DDA will pay in rent for the city-owned parking facilities. All the specific points that need to be addressed were summarized in a one-page document, which DDA executive director Susan Pollay distributed at the retreat [.pdf file of the one-page document].

Among them:

By contract the DDA is to provide the City with $1 Million/year in “rent” for an exact number of parking spaces in the City Hall lot, Farmers Market lot, 4th & Catherine lot, Palio lot and 1st & William parking lot. Yet the City eliminated the City Hall lot and approved a change to the Farmers Market lot that would reduce the number of spaces. Should the “rent” be determined by some other means than parking lot spaces?

Referencing the list of suggested edits to the parking agreement, Newcombe Clark stated, “To be blunt, these are all mostly molestations of the current contract.” He continued, “These are symptoms of a problem.” Turning to the attorneys in the room, Clark asked: “How do you stop people from violating a contract?” Russ Collins and Gary Boren seemed to suggest it was a matter of asserting the fact of the contract: “We say we have a contract!”

By way of historical background, the DDA has not done that. DDA executive director Susan Pollay related at a July 2010 MBC meeting how the DDA had handled an apparent violation of the parking agreement by the city, when the city decided to install parking meters outside the DDA district. From Chronicle coverage of that meeting:

In early 2009, when the city staff elected to pursue a strategy of installing parking meters in residential areas outside the DDA district, that was not consistent with the contractual language of the city-DDA parking agreement, Pollay said. Revenues from the parking meters in “the city’s parking system” are, per the contract, supposed to be received by the DDA. Given that the city was looking for ways to make up revenue shortfalls for the FY 2010 budget at the time, Pollay said that the DDA weighed whether or not to “make a stink.” Instead of challenging the city’s move based on the contract, Pollay said, they’d expressed their skepticism that the additional meters would actually generate the kind of revenue that the city was hoping for.

Responding to Pollay’s description at that same meeting, Carsten Hohnke, who serves on the city’s MBC, characterized the lapse as “institutional amnesia.” From The Chronicle’s coverage of that meeting:

Hohnke alluded to some of Pollay’s previous remarks about topics that the current agreement already addressed but that had not been treated by the city as contractual obligations. Those had been instances of “institutional amnesia,” he said. The new agreement needs to reinforce what was covered in the original 2002 agreement as a contract, he said – the parking system.

With respect to the idea of a contract between the city and the DDA, Boren said at Wednesday’s retreat: “I don’t think there’s a sense of mutuality.” Various board members suggested that it was a matter of a cultural difference between the DDA and the city.

DDA board chair Joan Lowenstein ventured that such a cultural difference would not be solved during the retreat.

At the DDA’s May 5, 2010 meeting, when the board authorized a $2 million payment to the city beyond what the current parking agreement required, Lowenstein had expressed frustration at the view of the DDA as separate from the city:

Lowenstein said she found it distressing to hear the kind of “us and them” discussion. It’s not us and the city but rather it’s all the city.

The idea that “it’s all the city” has been attested during the MBC summer negotiations. At Wednesday’s retreat, Boren recalled an exchange with Christopher Taylor – who serves on the city council’s MBC – at one of the early MBC meetings. In that exchange, Boren had stated the need to get something for the $2 million the DDA had voted to allocate to the city. [Both Taylor and Boren are attorneys.] Taylor’s response, reported by Boren at the retreat, was to ask Boren: “Is there an element of corporatism here?”

That, said Boren, seemed to be an unwitting acknowledgment on Taylor’s part about how the city’s representatives see the DDA: “I don’t believe they understand that we’re an independent entity. It’s a function of the people here and who the mayor – appropriately – appoints.” Continued Boren,”It has to do with who they think we are and who we think we are.”

The assumption on the DDA’s part that the DDA is a separate corporation [as specified in the state enabling legislation for DDAs] with whom the city can negotiate a binding contract has been made explicit during the MBC summer talks. From The Chronicle’s report on the talks as they had unfolded through late July ["City-DDA Parking Talks Gain Tempo"]:

[Roger] Hewitt weighed in on the contractual aspect of the agreement by saying that if the view of the city was that the DDA was merely an arm of the city, as opposed to an entity that could enter into contracts with the city, then the committees were wasting their time.

At Wednesday’s retreat, Newcombe Clark stated that he did not care if the city wanted to simply take the money from the DDA, but that his concern was that the DDA – by extending additional payments to the city beyond what’s required by the existing contract – was effectively trying to create a contract with no financial consideration. Otherwise put, in order to make a contract legal and binding, there needs to be some “consideration,” something of some value, that one party offers to the other in exchange for money.

Clark’s attempts to find ways to establish consideration have received relatively little traction with the board: (i) purchasing land; (ii) funding downtown police patrols; (iii) sunsetting the DDA’s obligations in the Village Green City Apartments development at First & Washington; (iv) waiving the DDA bond fees it must pay when bonding using the city’s full faith and credit.

Based on remarks by Roger Hewitt at Wednesday’s retreat, any needed consideration might be achieved by extending the length of the contract.

Washington & Fifth Avenue, looking northwest. The concrete mixer is parked directly in front of the DDA offices. The entry for the board's Sept. 1 meeting was through the alley and the garage, which makes up part of the ground floor of the Fifth Avenue Building. (Photos by the writer.)

The first issue, handled with relatively little comment, was the report out from the DDA’s “mutually beneficial” committee, given by Roger Hewitt. The committee has been meeting over the course of the summer with a corresponding committee from the Ann Arbor city council to renegotiate the parking agreement under which the DDA manages the city’s parking system.

While board members Newcombe Clark and Russ Collins commented in a general way on the status of the conversations, it did not lead to any specific directive to the DDA’s committee for its next meeting, which will take place on Sept. 13 at 8:30 a.m.

However, at the suggestion of DDA executive director Susan Pollay, the board will schedule a retreat between now and its monthly board meeting in October – but likely after Sept. 13 – to focus on the “mutually beneficial” issue. In the meantime, the DDA’s committee will request of its city council counterparts that they provide their own assessment of the status of the negotiations. The Sept. 13 meeting of the two committees will also be the occasion when Pollay provides a detailed version of the outline, which she’d provided at the last committee meeting on Aug. 23, for a possible role for the DDA in the development of city-owned surface lots.

The second issue dispatched by the board with little overt controversy was a resolution that Newcombe Clark had brought through the operations committee last Wednesday to allocate $50,000 for support of skatepark facilities. Clark himself suggested that the resolution be tabled, alluding to the “prism through which everything is looked at this time of year.” DDA board members went along with that suggestion.

The prism to which Clark alluded is a political one. Clark is running an independent campaign for the Ward 5 city council seat currently held by Democrat Carsten Hohnke. Hohnke has positioned himself as a champion of the skating community’s efforts to construct a skateboarding facility at Veterans Memorial Park, which is in Ward 5.

At Wednesday’s meeting, the newest member of the board, former Washtenaw County administrator Bob Guenzel, and the member he replaced, Jennifer S. Hall, were acknowledged by chair Joan Lowenstein – but neither was present. The board passed a resolution of appreciation for Hall’s service, and Lowenstein welcomed Guenzel “in absentia.”

Other business at Wednesday’s meeting included the usual updates from the board’s committees. Notable from the transportation committee was an effort to collaborate with the Ann Arbor Transportation Authority to enhance bus service between Ann Arbor and Ypsilanti. And from the partnerships committee came a summary of a presentation they’d received from the chief of police – there’s a difference between being statistically safe and the perception of safety.

Downtown Development of City-Owned Property

Roger Hewitt gave the update from the DDA’s “mutually beneficial” committee, which is renegotiating the agreement under which the DDA manages the city’s parking system. He noted that the committee had been meeting every other week – that’s more frequently than the originally planned once-a-month schedule. He said they’d come up with a matrix of parking issues and had identified various complications that would be involved in the DDA’s possible participation in the enforcement of parking regulations. One of those issues is getting access to records of prior infractions, Hewitt said. Hewitt was complimentary of the efforts of DDA executive director Susan Pollay.

Hewitt also noted that Pollay had created an outline for the DDA’s possible involvement in the development process for city-owned surface lots, which was circulated at the previous week’s committee meeting and was included in the board’s meeting packet for that day. The role of the DDA in downtown development is a key element of the term sheet guiding the committee discussions.

The issue had been discussed by the board’s executive committee, Hewitt said. By way of background, the executive committee of the DDA board is defined in the body’s bylaws as follows:

Article V – Executive Committee: The officers of the Board, including Chair, Vice Chair, Treasurer and Recording Secretary shall constitute the executive committee. The last former Chair shall be a non-voting member and the Executive Director shall be a non-voting ex officio member of this committee.

Based on the results of the July annual meeting elections, the current executive committee consists of chair Joan Lowenstein, vice chair Gary Boren, treasurer Roger Hewitt, secretary Russ Collins and former chair John Splitt, along with non-voting member Susan Pollay.

Hewitt reported a desire to have a board retreat to guide how the “mutually beneficial” committee should proceed. Lowenstein called the idea of a retreat a good one, because there might be some ideas that have shifted since those discussions started.

Newcombe Clark asked if it might be reasonable to have the members of the city council’s “mutually beneficial” committee give a status report on the discussions from their point of view. Clark noted that if the reporting on the meetings has been accurate, then there has not been a lot of feedback from councilmembers.

Russ Collins, who serves on the DDA’s “mutually beneficial” committee, said that asking for that kind of feedback was reasonable. He noted that the committee had learned a lot about the bureaucratic and legal issues involved that would make the DDA’s enforcement of parking regulations difficult.

Responding to Clark, Collins allowed that yes, the DDA did need to focus on what the DDA wanted, but that if it’s impossible to get it, then that needed to be recognized. Collins emphasized that the committee had learned a great deal, characterizing the discussions as “productive, but frustrating.”

Clark expressed some frustration by saying, “What we want is irrelevant, because they have what they want.” He was alluding to the fact that the DDA in May had already agreed to pay the city an extra $2 million in FY 2010-11, which was not required by the original parking agreement.

Hewitt indicated that the next meeting of the city and DDA committees would take place on Sept. 13 at 8:30 a.m. – he would not be able to attend. Other members of the DDA’s committee are Gary Boren, Russ Collins and Sandi Smith.

Expected at that meeting is the more fully articulated, detailed plan for the DDA’s role in the development of downtown city lots.

Library Lot RFP Review Committee

If the DDA takes on a more active role in the development of city-owned land downtown, and if a suggestion from Ward 5 councilmember Carsten Hohnke is acted on, the Library Lot could be a parcel on which the DDA eventually leads the development process. Hohnke’s suggestion, made at a Democratic primary election forum, was that consideration of the Library Lot be restarted as a blank slate, with no preconceptions. An underground parking garage is currently under construction on the parcel, and a city-led committee is handling the review of proposals that were submitted for the lot last year. [Chronicle coverage: "Hotel/Conference Center Proposals Go Forward"]

At Wednesday’s DDA board meeting, John Splitt reported out from the committee that’s reviewing proposals for development of the parcel above the underground parking garage – he represents the DDA on the committee, which includes city staff as well as councilmembers Margie Teall and Stephen Rapundalo. Rapundalo chairs that committee.

Splitt gave essentially the same kind of update on the committee that Rapundalo has given his city council colleagues at recent meetings. The committee has not met in about four months, Splitt said. A consultant [Roxbury Group] has been hired and is doing due diligence on the two proposals that are still under consideration. The consultant’s meetings with the proposers should be concluded in time for the committee to meet sometime towards the end of September, Splitt said.

Skatepark Support

As chair of the operations committee, Roger Hewitt described to the board a resolution that Newcombe Clark had brought to that committee the previous week that allocated $50,000 of funds “to be used as matching funds for new public or private dollars raised in support of skate facilities and resources to be located and invested in the DDA District or within radial proximity of the DDA District.”

Skatepark: Tabling the Resolution

Hewitt said he didn’t feel the operations committee was the proper committee to review the proposal and said there were a number of problems with it. He thus stated that he did not want to move the resolution, but invited Clark to do so if he wanted to do so.

The proposed skatepark location in Veterans Memorial Park (yellow push pin) is 1.3 miles from the DDA boundary (shown in red.) (Image links to higher resolution file.)

Clark moved the resolution, but in the same breath indicated he was open to the idea of tabling it – Gary Boren and others clarified that the first step was to actually move the resolution. After establishing that the resolution had actually been moved and seconded, Clark described how he was approached by the skatepark supporters – as other DDA board members had been – about possible support from the DDA for their efforts.

Those efforts include a location at Veterans Memorial Park, Clark said, and so he and others were “stretching” to find a way to directly support  their efforts. [The "stretching" to which Clark alluded is a function of the city park's location, which is at the corner of Maple and Dexter-Ann Arbor roads, across from the new Aldi's. That's roughly 1.3 miles away from the DDA tax district boundary.]

Clark noted that the skatepark had gained support from Washtenaw County, the city of Ann Arbor, all the merchant associations, the Neutral Zone teen center – “all of our regularly supported friends and neighbors here,” said Clark. They all recognized how giving skaters a proper facility would help make the downtown safe take some of the burden off of downtown infrastructure. So he said he’d come up with the resolution as a way to support the effort with a relatively small amount of money.

But Clark noted that subsequently, he’d understood that there is “a prism that everything is looked through this time of the year,” and that he understood reservations that people might have.

Outcome: The board voted to table the resolution – with two audible votes against tabling from Sandi Smith and John Splitt – and the suggestion to the partnerships committee to take up the issue.

Skatepark: Political Prism

The political prism to which Clark alluded includes the fact that Clark is running an independent campaign for the Ward 5 city council seat currently held by Democrat Carsten Hohnke. Hohnke has positioned himself as a champion of the Ann Arbor Skatepark’s efforts to construct a skateboarding facility at Veterans Memorial Park, partly through his drafting of a letter from city councilmembers encouraging the Washtenaw County Parks and Recreation Commission to support the skatepark with a $400,000 matching grant. And Hohnke is endorsed by Trevor Staples, who is chair of the board of directors of Friends of the Ann Arbor Skatepark. The race for the Ward 5 seat is a three-way contest between Hohnke, Clark and John Floyd, who is the Republican nominee.

In a post on the Friends of the Skatepark website, Staples wrote about Clark’s resolution:

I feel that it’s important we point out that the Friends of the Ann Arbor Skatepark was approached by Newcombe Clark with the resolution for DDA funding that he wanted to bring for a vote before the DDA. The Friends of the Ann Arbor Skatepark declined to support the resolution because we could not figure out how the dollars could be used for the skatepark, unless the skatepark was moved. This is not an option.

Skatepark: Location, Location, Location

The location issue cited by Staples in his post involves where the DDA can make its investments. When the Ann Arbor DDA was renewed in 2003, the plan included explicit provision for expenditure of funds outside the DDA tax district [emphasis added].

[page 9] In an effort to accomplish its mission, it is understood that the DDA may elect to participate in important projects outside the DDA District.

[page 24] The funds allocated by the DDA are intended to strengthen the downtown area and attract new private investments. This Plan recognizes that solutions to downtown problems (for example, traffic, access, and parking problems) may best be developed by spending funds outside the DDA district. Similarly, this Plan recognizes that a key to the future vitality of the downtown is stable and successful near downtown neighborhoods.

However, the Veterans Memorial Park location is 1.3 miles away from the DDA boundary. While the DDA board has no general policy on the distances beyond the DDA boundary, it does have a specific distance policy related to affordable housing. The DDA’s affordable housing policy is to support housing projects up to 1/4 mile away from the DDA boundary. This policy was affirmed at the board’s March 4, 2009 meeting. Those deliberations will likely be remembered as much for the 1/4 mile distance as for board members’ “channeling” former board member Dave DeVarti, who consistently championed the cause of affordable housing.

While the source of the skatepark support was proposed to be taken from a grant previously allocated to the Washtenaw-Livingston Rail (WALLY) project, those WALLY funds ultimately came from the DDA’s parking revenues. Those dollars enjoy somewhat more geographic flexibility, because they are not collected under the tax increment financing of the DDA district, but rather from parking fees. Although there’s somewhat more geographic flexibility, the DDA’s policy on investing parking revenues has been to look at the parking system as part of a “transportation system” and to fund transportation-related projects. For example, the DDA uses parking revenues to fund go!pass bus passes for downtown workers.

While skateboards do have wheels, it’s not straightforward to analyze a skatepark facility at Veterans Memorial Park as a transportation project.

During public commentary at the conclusion of the meeting, Ray Fullerton expressed some puzzlement at the skatepark resolution, asking for some clarification as to whether the support would be for the proposed Veterans Memorial Park facility or for some additional second location. Board members don’t typically engage in interactions with the public during their speaking turns, but Clark told Fullerton that “as written” the money could not be spent on the proposed Veterans Memorial Park facility.

After the meeting, Clark told The Chronicle it’s possible that the DDA’s partnerships committee might amend the resolution’s wording – which currently reads “skate facilities and resources” – so that it’s simply skate resources that are located in the district. In that case a resource like, for example, signage pointing people down Dexter-Ann Arbor Road to the skatepark could conceivably be located in the district, but still support the Veterans Memorial Park location.

Policing the Downtown

How the downtown gets policed was a topic that received discussion at a couple of different points during the meeting.

Policing: Funding Source

The source of the funds identified for Clark’s resolution in support of the skatepark is an as-yet unspent grant for the Washtenaw Livingston Rail (WALLY) project, which has an uncertain future. [At a recent Ann Arbor Transportation Authority retreat, the AATA board identified WALLY as a project they'd like to see start hitting some milestones for achievement.]

Clark has previously identified the unspent WALLY allocation as a funding source for a different initiative – restoration of downtown police patrols. At the May 5, 2010 DDA board meeting, the board remanded a resolution to its partnerships committee on the subject. From previous Chronicle reporting:

At the May 5 DDA board meeting, the board remanded a resolution to the partnerships committee on reserving of funds for a possible contract with the city to provide downtown beat cops. The resolution had been brought to the board by Newcombe Clark via its operations committee.

At the May 12 partnerships committee meeting, Clark said he was content not to press the resolution forward unless there was an attempt to grab the funds for some other purpose. The funds in Clark’s resolution on beat cops would be reallocated in monthly $60,000 increments from the WALLY north-south commuter train project, between Washtenaw and Livingston counties. There is a total of $335,000 reserved in the DDA budget for WALLY.

Policing: Downtown Area Citizens Advisory Council Report

Ray Detter, who chairs the Downtown Area Citizens Advisory Council, reported on that body’s regular meeting, which takes place on the Tuesday evening before the DDA’s first-Wednesday monthly board meeting. The existence of the CAC as a body is stipulated in the state enabling legislation for downtown development authorities.

Detter reported that the previous night’s meeting had included chief of police Barnett Jones, deputy chief John Seto and Ward 1 city councilmember Sabra Briere. He said they’d spent two hours discussing crime, panhandling and the challenges of police in the downtown area, as well as throughout the rest of the city. The discussion had been prompted, Detter said, by the expressed concern of downtown residents about petty street crime and aggressive panhandling being on the rise. Some people are attributing this increase, he said, to the reduction in sidewalk police presence.

One of the CAC members is president of the Sloan Plaza Condominium Association, Detter said, and he’d reported five separate security issues in a one-month period – twice a homeless person had stolen items out of the lobby, a smash-and-grab break-in, as well as homeless people sleeping behind the building.

Detter indicated chief Jones had observed that some of the homeless population are homeless “because they choose to be.” There’s an increase in people sleeping on the street, in parks, under bridges, Detter continued, and Liberty Plaza – an urban park at the corner of Liberty and Division – has become a problem once again.

Detter said that the CAC admired the ability of the police department to cope with the problems of crime in the city. He noted that while crime statistics are going down, arrests are going up. The police force has been reduced from 216 down to 124, he said, and they need help to solve this city-wide problem.

Detter said that Briere had indicated she’d be bringing a resolution to the city council at its Sept. 20 meeting to re-establish a panhandling task force. Detter alluded to the work done from 2001-03 by a previous task force, which had prompted a revision to the city’s panhandling ordinance. The ordinance revision had been due in part to the efforts of Joan Lowenstein, Detter said, who was then a member of the city council.

Detter stated that now we need action again.

The city’s “panhandling ordinance” is not known by that label in the city code. It’s a part of Chapter 108 on disorderly conduct and is covered in the section on solicitation:

9:70. Solicitation.
Except as otherwise provided in Chapters 79 and 81 of this Code, it shall be unlawful for any person to solicit the immediate payment of money or goods from another person, whether or not in exchange for goods, services, or other consideration, under any of the following circumstances:
1. On private property, except as otherwise permitted by Chapters 79 and 81, unless the solicitor has permission from the owner or occupant;
2. In any public transportation vehicle or public transportation facility;
3. In any public parking structure and within 12 feet of any entrance or exit to any public parking structure;
4. From a person who is in any vehicle on the street;
5. By obstructing the free passage of pedestrian or vehicle traffic;
6. Within 12 feet of a bank or automated teller machine;
7. By moving to within 2 feet of the person solicited, unless that person has indicated that he/she wishes to be solicited;
8. By following and continuing to solicit a person who walks away from the solicitor;
9. By knowingly making a false or misleading representation in the course of a solicitation;
10. In a manner that appears likely to cause a reasonable person of ordinary sensibilities to feel intimidated, threatened or harassed;
11. Within 12 feet of the entrance to or exit from the Nickels Arcade, located between State Street and Maynard Street; the Galleria, located between S. University and the Forest Street parking structure; and the Pratt Building, located between Main Street and the Ashley parking lot; or
12. From a person who is a patron at any outdoor cafe or restaurant.

Policing the Downtown: Partnerships Committee Report

Russ Collins reported that the partnerships committee had invited chief of police Barnett Jones and deputy chief John Seto to make a presentation to the committee on the status of policing in the city. Collins noted that there’s a difference between the perception and the statistics of safety. With respect to statistics, Collins said, Ann Arbor is very safe. And from the point of view of perception, he continued, Ann Arbor is also perceived as essentially safe. But he allowed that “young people can act enthusiastically.”

He also said that there was a lot of support for the idea of having downtown police patrols, because the perception of safety can be even more important than the statistics of safety. Collins said that the relative leniency of the panhandling laws in the absence of policing meant that people’s perceptions didn’t necessarily match the statistical reality of safety.

Newcombe Clark noted that when the crime statistics are low, it might take only one or two “bad apples” to skew the numbers higher. At that, Collins quipped, “You’re not talking about Ray [Detter] specifically, though, right?” After the laughter quieted down, Clark continued by saying that a large number of incidents could be the work of one or two individuals.

The other point that Clark highlighted from the police department’s visit to the partnership’s committee CAC was that the police force is good statistically at catching all the perpetrators of major crimes quickly and efficiently – but they feel the pressure to be proactive. Summarizing what the two officers had presented at the meeting, Clark said that an armed robbery might or might not happen, depending on whether they knew there’d be police officers nearby.

The “slippage” at Liberty Plaza, Clark said, could be attributed to the fact that the people who are new to town don’t know the panhandling rule, and those who know it, know that there aren’t beat cops walking around regularly enforcing it. He said it did not undercut the argument for downtown patrols to observe that statistically the Ann Arbor police do a really good job, especially considering that they have 100 fewer officers than they had a few years ago. Clark concluded by saying he didn’t want to let the issue go, simply by saying “the stats are good.”

Collins agreed with Clark’s basic sentiment – we’d all like bicycle patrols and beat cops restored because that provides a very effective message to the citizens and to the “nefarious people.” Safety is not only a statistic, he said, but also a feeling.

Some Chronicle readers may have noticed bicycle-mounted Ann Arbor police officers along Fourth or Fifth Avenue near the Blake Transit Center. The Ann Arbor Transportation Authority contracts for security at the bus station. It’s not part of a general downtown beat patrol.

DDA Finances: Bond Payments, Timelines, Parking Revenue

As part of the operations committee report, Roger Hewitt presented the final unaudited summaries and fund balance sheets for FY 2010, which ended June 30. A point raised by Newcombe Clark was an asterisk next to a line in the TIF Fund Income Statement for the line item indicating “bond payments” for $1,569,605. The footnote reads: “Includes $508,000 for the Police/Court Facility Grant.”

Clark asked that in the future, that amount be reflected instead in the line item for “Grants & Transfers.” The arrangement is that the DDA has committed to grant the city of Ann Arbor the funds to make part of the city’s bond payments for the new police/court facility [aka municipal center]. At the meeting, deputy DDA director Joe Morehouse indicated the duration of the grant to be 25 years.

Also as part of the operations committee report, Hewitt noted that the board packet included a detailed set of milestones, which Village Green – developer of the City Apartments project at First and Washington – needs to hit as part of the purchase option agreement. That agreement was extended by the city council at its Aug. 5 meeting. Clark picked up on the fact that the turnaround time for DDA activities and involvement were all relatively short – in many cases a day. He suggested that the DDA “politely ask” that it be kept in the loop on those matters.

The parking revenue report that is always a part of the operations committee report showed some decreases in monthly numbers, compared year over year. For example, the Maynard structure showed $10,361 less revenue in June 2010 compared to June 2009, with 4,398 fewer hourly patrons using the structure.

             JUNE 2010          JUNE 2009         2010 VS. 2009
          Hourly             Hourly               Hourly
        Revenues  Patrons  Revenues  Patrons    Revenues  Patrons
Maynard $151,538  43,826   $161,900  48,224    ($10,361)  (4,398)

-

A breakdown of art fair parking showed $218,230 in revenues compared to $244,180 for 2009 for a decrease of $25,950 – the weather had been terrible this year, with downpours and tornadoes in the area. Hewitt said that most of the monthly difference for July 2010 – which was $$33,975 or 2.55% less that July a year ago – could be accounted for by the decreased revenues during art fair. Hewitt suggested that the quarterly and annual reports gave a better feel for how things are going than the month-to-month reports.

Changing of the Guard

At the start of the meeting, the board’s new chair, Joan Lowenstein, who was elected at the annual meeting held just after the regular board meeting in July, welcomed the board’s newest member, Bob Guenzel. Guenzel retired as Washtenaw County administrator earlier this year. Lowenstein indicated that Guenzel’s absence was due to a previously planned vacation, but she still welcomed him “in absentia,” quipping, “He doesn’t know about the whole hazing thing, yet.”

Guenzel is replacing Jennifer S. Hall. The board unanimously passed a resolution acknowledging her service, which is the usual pattern and practice of the board. Hall’s period of service included a turn as board chair from 2008-09. The resolution highlighted her commitment to open government:

Whereas, Jennifer Hall encouraged important changes to the DDA’s processes, meetings, and website to foster a strong sense of public openness, accountability and transparency;

That commitment emerged perhaps most publicly when it became clear this past spring that members of the DDA board and the city council had done significant work on re-negotiating the city-DDA parking agreement – work that took place out of public view and outside of the committee structure that both bodies had established to undertake that work.

At the May 5, 2010 DDA board meeting, when the DDA board voted to grant $2 million to the city as a unilateral amendment to the parking agreement, Hall gave a blistering critique of the way the discussions had been conducted out of public view, against the DDA’s commitment to openness and against the specific mandate she’d given – as chair at the time the DDA’s mutually beneficial committee was formed – that the discussions be open and transparent. [For Chronicle coverage of that meeting, see "DDA OKs $2 Million Over Strong Dissent."]

The resolution thanking Hall also highlighted some of the specific projects she’d worked on during her period of service:

Whereas, Jennifer Hall also encouraged a number of signature DDA projects and programs, including approval of the Fifth & Division pedestrian and bicycle improvements project, installation of in-street seasonal bicycle racks and expansion of DDA funding for the getDowntown program and go!passes;

After Lowenstein read the resolution aloud, the board approved it without comment.

Public Comment: Electric Cable

Paul Ganz – DTE Energy regional manager for the counties of Ingham, Jackson, Livingston and most of Washtenaw – told the board he was appearing before the board on a bit of a “whimsy.” In connection with the underground parking garage project along Fifth Avenue, he said, DTE had been working with Susan Pollay, executive director of the DDA, and Adrian Iraola of Park Avenue Consulting, who works with the DDA to help manage projects. [Various utilities have required relocation in connection with the project.]

Paul Ganz of DTE Energy presented board members with their own slice of history – a piece of an underground high-voltage cable that had been replaced as part of the construction of the underground parking garage the DDA is currently building on Fifth Avenue. DDA board member Leah Gunn is in the background.

To provide the board with a historical perspective, he distributed roughly hockey-puck-sized cross-sections of electrical cable, which he said was typical underground high-voltage electric cable – it had been installed 34 years ago, in May 1976.

Ganz noted that the copper wires are wrapped in lead to help protect them. Ordinarily, the cable is recycled, because the metal is valuable, he said. But he felt like it was worth sacrificing a foot or two of the cable, sliced up into pieces, so that board members could keep a piece of it on their desks as a memento. He concluded by thanking the DDA for their cooperation.

Board member John Mouat commented that he liked the “peace sign” that was formed by the insulation around the three separate clusters of copper wire that make up the cable.

Leah Gunn thanked Ganz, saying she’d add the cable slice to her concrete chunks from Fourth & Washington, and pieces of re-bar from First & Washington – a kind of “parking structure memorial.” Russ Collins also thanked DTE for the work involved in relocating the utilities, which had to be coordinated and timed in a crucial way.

Cross section of high-voltage undeground cable presented by Paul Ganz of DTE to DDA board members.

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

Absent: John Hieftje, Bob Guenzel.

Next board meeting: Noon on Wednesday, Oct. 6, 2010, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

What's the relationship of the Ann Arbor Downtown Development Authority to the city of Ann Arbor? Ann Arbor DDA offices on Fifth Avenue are on the left. The new city hall building is visible behind the backhoe one block to the north. The construction work is part of the DDA's streetscape improvements for Fifth and Division streets.

At the meeting, the committees focused on the question of how the DDA might take on responsibility for enforcement of parking regulations. The DDA would like the ability to manage parking enforcement, so that it can implement an approach to enforcement that complements a demand management pricing strategy and a customer-service approach to downtown. However, the city has identified a number of ways in which it believes the DDA would be constrained in its ability to enforce parking regulations.

At Monday’s meeting, those constraints had accumulated to the point where it became a fair question: Would the DDA still find parking enforcement an attractive proposition, given the constraints? The meeting did not settle the question, with some hope maintained on the DDA side – by Sandi Smith, specifically – that the DDA might play some role in enforcement.

However, if parking enforcement is not something the DDA takes on, it’s not clear what the basis will be for the additional payments the city would like the DDA to make, beyond what is required by the current parking contract. That contract was renewed in 2005. It required a $1 million per year payment by the DDA to the city, with the provision that the city could request $2 million in any given year, and that the total amount did not exceed $10 million from 2005-2015. The city requested $2 million for the first five years, and the DDA agreed unilaterally this past May to make an additional $2 million payment to the city.

When the discussion at Monday’s meeting moved from parking enforcement – which seemed like it had been pushed to the edge, if not completely off the table – to the calculation of a formula for a DDA payment to the city, Susan Pollay, executive director of the DDA, questioned on three separate occasions: Where is the benefit to the downtown in this?

Also at the meeting, the committees got a preview of an outline sketch regarding how the DDA might play an active role in the development of city-owned downtown surface parking lots.

The committees are scheduled to meet next on Sept. 13. Their twice-monthly meeting schedule was adopted starting in July, when it became apparent that the target date of Oct. 31 for a new contract ratified by the respective bodies would not be achieved with a once-monthly schedule.

Mutually Beneficial Background

Members of the council’s committee are Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). Representing the DDA are board members Sandi Smith, Russ Collins, Roger Hewitt and Gary Boren. Smith is also a city councilmember, representing Ward 1.

The committees are working from a term sheet for discussion, which contains four main points. The second item, code enforcement, was eliminated early on from further discussion.

• Parking Enforcement: DDA assumes responsibility for enforcement of parking rules.
• Code Enforcement: DDA assumes responsibility for enforcement of other community standards codes (e.g., sign violations).
• Services: DDA assumes responsibility for various services in the downtown.
• Development: DDA assumes responsibility for development of city-owned downtown surface parking lots.

Most recent Chronicle coverage: “City, DDA Parking Talks Gain Tempo”

DDA Responsibility for Parking Enforcement

Carsten Hohnke had been absent from the last two meetings, so he asked to be brought up to speed, by telling the other committee members that his understanding was that significant headway was made in understanding the parking enforcement issue.

Susan Pollay, executive director of the DDA, confirmed Hohnke’s understanding by saying that she and Sue McCormick, public services area administrator for the city, had been constantly updating “the matrix” – a grid of all the points of entry into the parking system, with associated policy points and recommendations.

Parking Enforcement: No to DDA Referees

Pollay noted that they’d recognized the difficulty in assigning responsibility to the DDA for parking referees. Referees hear appeals of parking tickets. There are two reasons militating against DDA responsibility for the referees, she said. First, half of the cost for the referees is shouldered by the University of Michigan, because the university refers appeals of tickets written by UM Public Safety to the city’s process. That introduces a complication that would require UM participation in the agreement. Second, there is a “productive distance,” Pollay said, in assigning separate entities to handle enforcement and appeals. Currently that separation is maintained by the city’s assignment of enforcement to its community standards officers – who ultimately report to the chief of police – while appeals are handled through the city treasurer’s office – whose referees ultimately report to the city administrator.

All mentions of “parking referees” in the set of recommendations in the matrix are now struck through.

Parking Enforcement: No to DDA Citing Specific MVC Violations

There’s continued interest on the DDA’s part, said Pollay, in managing enforcement. There are also challenges inherent in that. For example, there are a variety of parking infractions [e.g., no parking in handicap zone without appropriate sticker] that require the enforcing entity to have a reporting relationship to the chief of police, which a potential parking enforcement subcontractor like Republic Parking does not have.

The discussion of these kind of infractions at Monday’s meeting did not come immediately with Pollay’s summary. Sue McCormick picked up the topic later, saying there are certain kinds of Michigan Vehicle Code infractions that require a police officer to write the ticket. As an example she gave handicapped parking. Sandi Smith wanted to know if it was not possible to deputize someone to perform that function. Pollay wanted to know what exactly it meant to have a “reporting relationship” with the police chief. McCormick clarified that if Republic Parking did the enforcement, then there would be no direct line of reporting.

Pollay commented that it appeared the DDA might only be able to write tickets for a couple of different kinds of infractions.

Smith observed that if someone was out writing tickets for over-the-limit infractions, it just made sense from an efficiency point of view for that person to be able to write a ticket for a handicapped parking violation. It didn’t make sense to have to call someone else or have someone else cover the same ground.

McCormick pointed out that to a certain extent there would be people covering the same ground – there would be patrols for vehicle impoundment and patrols for community standards violations. In addition, McCormick stressed, the authority to write over-the-limit tickets would not be exclusively granted to the DDA.

Pollay indicated that she would explore how other communities handled enforcement of the MVC infractions to see if there was a model that would provide for the DDA’s contractor to enforce those infractions.

Parking Enforcement: No to DDA Contractor LEIN Access

The lack of a reporting relationship to the chief of police also prevents a subcontractor like Republic Parking from getting access to the Law Enforcement Information Network (LEIN). That would prevent an enforcement officer from getting the history of infractions incurred by a specific vehicle and taking action calibrated to any previous tickets. For example, a fourth unpaid ticket is supposed to result in the towing of the vehicle.

As Sue McCormick had pointed out at the Aug. 9 meeting of the two committees, monitoring for vehicles that should be towed could be handled fairly efficiently with mobile license plate reading equipment that was paid for through a Department of Justice grant, which was accepted by the city council at their June 15, 2009 meeting. So the issue is not really so much about a general inability to enforce the four-unpaid-ticket rule. However, part of the DDA’s interest in taking responsibility for parking enforcement is based on a desire to implement a system of fines that would escalate the cost of a ticket based on prior tickets, or perhaps provide for first-time forgiveness. Without access to LEIN, such a system would not be possible.

Parking Enforcement: No to DDA Enforcement Outside District

An additional challenge is a dispute between the DDA’s legal counsel, Jerry Lax, and Mary Fales in the city attorney’s office over the question of whether the DDA could be granted the authority to enforce parking rules outside of the DDA tax district. Pollay described Lax’s argument as based on two factors: (i) the precedent of the DDA managing parking facilities outside the DDA tax district, and (ii) the latitude provide by the state enabling statute.

On Monday, McCormick identified the outside-the-district issue as leftover from the Aug. 9 meeting and suggested that what needs to happen is for the two attorneys to meet and to “duke it out.” She suggested that Lax needed to contact Fales.

Pollay responded by saying that Lax had done that and that Fales has not responded. What the DDA would like, Pollay said, is for Fales to lay out why she thinks it’s prohibited for the DDA to enforce parking rules outside of its district.

Christopher Taylor interjected that the question is not as simple as inside versus outside the DDA district, but rather it relates to corridors leading to the DDA. [Apparently, it's Fales' legal opinion that corridors leading to the DDA district, but still outside the district, might be fair game for the DDA management of parking enforcement.]

McCormick described the difference in opinion between the two attorneys as involving a fundamentally different view of the law: Lax is looking for prohibitive language and not finding any; Fales is looking for enabling language and not finding it – except perhaps for corridors.

Pollay then pointed to two occasions on which the city council had approved DDA activity outside the DDA tax district. One was the DDA renewal plan, adopted in 2003, which extended the DDA’s charter for another 30 years to 2033. It explicitly contemplates DDA activity outside the district: “In an effort to accomplish its mission, it is understood that the DDA may elect to participate in important projects outside the DDA District.”

A second set of occasions on which the city council had explicitly acknowledged the ability of the DDA to exercise responsibility outside the district, said Pollay, were the parking agreements that had included provision for the DDA to manage specific parking facilities outside the district.

Responding to the precedents cited by Pollay, McCormick said that Fales had specific views about what was unique to those circumstances that made DDA activity possible outside the tax boundary.

Pollay noted that in any case the conversation between the attorneys did not seem to be moving forward.

Parking Enforcement: No to Local Downtown Bank

A topic of conversation from a previous meeting was the idea of re-bidding the contract for processing payments for tickets, so that a local, downtown bank might do the processing. Pollay reported that Joe Morehouse, deputy director of the DDA, had done some background research, and concluded that when the RFP was issued, only two responses had been received, and of those, only one of them had arrangements with the secretary of states of all 50 states. That was a deciding factor in awarding the contract to the Complus Data Innovations Inc., a Tarrytown, N.Y.-based company, because they had the ability to pursue payment in all 50 states. That’s a consideration in a city like Ann Arbor, where a significant percentage of tickets written are to university students who leave the city after a few years.

Some limited discussion unfolded concerning the possibility that Complus might set up a lockbox in Ann Arbor, so that the perception would be conveyed that people are not paying money to an out-of-state firm.

Parking Enforcement: What Do All These Nos Mean?

After discussion of the various challenges that had emerged that are inherent in the DDA’s management of parking enforcement, Carsten Hohnke floated the idea that there might be enough constraints to make it no longer attractive to the DDA to pull parking enforcement “into its fold.”

Sandi Smith was not ready to sign on to the idea that the DDA would give up its pursuit of parking enforcement, saying that she would like to have chief of police Barnett Jones come speak to the committees about how possible communication might work between enforcement personnel contracted by the DDA and the city’s community standards officers.

Roger Hewitt, who arrived at the meeting after the various challenges to DDA enforcement of parking had been discussed in detail, wondered what the DDA was getting out of the “mutually beneficial” arrangement, if parking enforcement were eliminated from it.

Fuller Road Station

Hewitt and McCormick had a brief exchange about Fuller Road Station and how it might fit into a revised parking agreement. [The planned project is a joint city of Ann Arbor/University of Michigan parking structure and bus depot, which might eventually include a train station.] Hewitt felt like it should be included as part of the city’s parking system and covered in the agreement. McCormick saw the city’s share of the parking there simply as sufficient to meet the needs of possible future use in connection with the facility as a transit station.

Hewitt allowed that when it is first built, those parking spaces might well reflect simply a “money in, money out” proposition, but he could imagine that eventually those spaces would generate revenue. He cautioned against the creation of two separate parking authorities.

Russ Collins noted that the topic of a parking authority had arisen at previous meetings. The question, Collins said, is how to add parking enforcement to the DDA’s responsibility and have appropriate levels of cooperation between the city and the DDA.

Revenue

If the DDA were to assume responsibility for enforcement of parking regulations, then the city wants to ensure that its revenue from fines is not diminished. The other piece of the revenue equation is the DDA’s revenue currently collected from users of the parking system.

Revenue: Enforcement

One of the principles that is supposed to guide the discussion of the two committees is the idea that the city of Ann Arbor is to be “held harmless” with respect to revenue and costs if the DDA assumes responsibility for parking enforcement. Part of the equation is revenue from parking fines. At Monday’s meeting, Sue McCormick provided a chart of fine revenues broken down by violation code. Expired meter and parking-past-the-allowable-time type violations were easily the highest revenue generators, together accounting for $2.4 million in tickets owed.

Sandi Smith and Susan Pollay both quickly spotted a crucial detail in McCormick’s data set – it was a summary of July 2005 through June 2006. Said Pollay, “This data is four years old!” Smith noted that fine revenues have been declining since then. About the old data, McCormick said, “This is all I got from treasury.” [The city treasurer had given the city council a presentation in November 2009 about more recent parking fine revenues.]

Roger Hewitt wanted to know if there was a proportionate time investment in writing tickets for the top revenue-producing tickets – the answer seemed to be that it was not. Such tickets could be written more efficiently than other types of tickets.

For ballpark purposes, there was a consensus that between $1.5 and $2.5 million could be added to existing parking system revenues for purposes of determining how big a revenue pie was under discussion.

Revenue: Parking System Patrons

Pollay provided pie charts showing how the DDA parking fund revenues were distributed as expenses. For FY 2010, here’s the breakdown:

Ann Arbor DDA
Parking Fund Expenses
FY 2010

$6,337,237  (35.7%) Direct parking expense (Republic)
   441,823  ( 2.5%) Alt transit (go!pass)
 2,093,605  (11.8%) Parking maintenance transfer
 2,825,901  (15.9%) Rent to city plus street fund to city
 1,699,451  ( 9.6%) Down payment on 5th Ave. underground
 3,779,516  (21.3%) Bond payments
   563,635  ( 3.2%) DDA administration

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Fundamentally, the fourth line is the one under discussion by the two committees.

Structure of DDA Payment to City: Mutually Beneficial?

Roger Hewitt introduced the topic of how to structure the DDA’s payment to the city. If it’s specified as a percentage of the net revenue, then it would not amount to much, no matter what the percentage is, he said.

Although she did not raise the issue on Monday, at the Aug. 9 meeting, Sue McCormick had pointed to the basic notion of the city being held harmless and left “whole” as a result of the agreement, which underpinned the entire conversation. A percentage as opposed to a specified sum, she’d said on that occasion, did not leave her feeling “warm and fuzzy about being whole.”

Mutually Beneficial: Rewind to Aug. 9 Meeting

Also on Aug. 9, Collins had also pointed out there’d been an agreement that the DDA would pay $1 million a year to the city. [Collins was alluding to the 2005 parking agreement, which stipulated $1 million per year, or an option for the city to take $2 million in any given year provided that the total amount over 10 years, from 2005-2015 did not exceed $10 million.]

The agreement was “practically invalidated” said Collins, so it’s not really a hold harmless situation. Rather, it’s how the DDA and the city, with the best interest of the citizens in mind, benefits everybody to the best of their ability. The $10 million was paid in five years, Collins said. Because of the city’s dire financial situation, the DDA had paid another $2 million [in May 2010]. So what the DDA is looking to do, said Collins, is find a way to rationalize that kind of payment to the city annually. At the same time, he said, they were looking for a way to benefit the city, the DDA and citizens by changing the way that parking enforcement is done.

As far as “hold harmless,” Collins said, they had a situation where there is a contract and the DDA has now paid an extra $2 million more than required by that contract. They wanted to do the right thing by the city and by the DDA, but mostly they wanted to do right by the citizens by making the right decisions “in these complicated times,” Collins said. Whatever the mechanism of arriving at the price, he said, it had to be in the spirit of doing the right thing for the citizens. That’s what mutually beneficial means, he concluded.

Gary Boren followed up by saying that before the $2 million was discussed, they already knew that revenues due to fines [collected by the city] would be decreasing and revenues due to compliance [fees paid to park, collected by the DDA] would be increasing. That trend was due to various parking technologies. For that reason, Boren said, it didn’t make sense to think in terms of holding harmless with respect to profit levels at any particular point in time.

Collins then returned to the theme of whose interest they were working for – citizens and the community. He spoke of the disconnect between the nature of the dialog and the nature of the press coverage and the nature of merchant organizations’ response to all of this on the one hand, and a DDA board that he felt was trying to work in the best interests of the community on the other hand.

By doing that, he said, the DDA board was “getting hammered” on all sides: by merchants who think the DDA is trying to “screw their customers;” by the city which needs funds; by themselves due to internal political conflicts within the board. It feels like the DDA is trying to do a good thing for the city, but they’re not getting the “attaboys” for trying, he said. Instead, the reaction from the community was “You guys are all nuts!” Either the DDA was nuts, he said, because the DDA had a contract – why didn’t they just insist that it be adhered to? Or the merchants think the DDA is nuts, he said, because they say they don’t “need this stuff anyway.” In this city, “no” is the easiest thing to say, Collins said, and the DDA is trying to say “yes.”

Mutually Beneficial: Fast Forward Return to Aug. 23

On Monday, Smith identified the expenses the DDA would incur for writing tickets as an unknown that would need to be balanced against the $1.5-$2.5 million in ticket revenue from fines.

At that point, Pollay noted that the discussion had already moved to a calculation for a payment, when the whole nature of the mutually beneficial arrangement appeared to be in question. If the DDA were not to take responsibility for parking enforcement, she said, she asked if the city had any suggestions for a mutually beneficial arrangement on which a payment could be based.

Carsten Hohnke pointed to the history of the development of the term sheet as reflective of the city’s position. He did not, he said, have anything in his “back pocket.”

Hewitt forged ahead with the discussion of the payment mechanism, saying that he was in favor of looking at gross revenue and determining some percentage of that. Smith suggested that it might be truer to the theory of “paying rent” if the formula involved a dollar figure per parking space. That would build in a specific ramification for the removal of spaces from the system’s inventory. [The removal of spaces from the system by the city without appropriate accommodation in the parking agreement has been a point of friction with the DDA.]

Pollay returned to her previous point, this time a bit more forcefully: “Where is the benefit to downtown?” she asked. She said she’d heard the calculation, but not the mutually beneficial part.

Collins observed that the two committees were trying to figure out the cost of a parking authority. It would be easier, he said, if the parking authority were not a part of the DDA.

Hewitt said he wanted a structure where the city council is a partner in the system. What he saw, he said, was continuing pressure from the city to get more and more money out of the parking system. That had been the case, Hewitt said, ever since he’d been on the DDA board.

Collins suggested that part of the pressure for more money could be addressed with the contract they were re-negotiating. He suggested that neither the city nor the DDA had been serious about the agreement as a contract.

[This was apparently a reference to the city's failure to adhere to certain terms of the contract, like the DDA's authority to manage "the" parking system in the city, which seems counter to the city's decision to install its own parking meters outside the DDA district. On the DDA's side, it decided not to cite the contract to challenge formally that city decision, in light of the difficult economic times. At a July committee meeting, Hohnke had attributed the city's actions to "institutional amnesia."]

The pressure from the city for more revenue, said Collins, was attributable to the down economy. Hewitt did not completely agree with Collins, saying there had been a lot of pressure from the city five years earlier as well. Collins identified the key issue as trying to understand the value of the parking system.

Picking up on Hewitt’s comments about five years ago, Smith said that five years ago, the city’s financial situation had been presented as dire, due to the “building located diagonally across from us” – an allusion to the police-courts facility, which is nearing the end of its construction and is visible from the DDA board room window, on the other side of Fifth Avenue, one block north. Now the dire situation, she said, is due to the general fund.

Collins said that no organization of any description ever felt like it had enough money.

Christopher Taylor sought to move the discussion back on the track of the payment by noting that the committees agreed on the broad principle of holding the city harmless and of charging the DDA with as much responsibility as possible for parking enforcement. He asked if the next step would be to come up with a formula.

Pollay returned again to her question: How does it benefit the downtown? The goal of the term sheet, she said, had been to establish a mutually beneficial arrangement. However, she said that from the city, with respect to parking enforcement, they’d heard “no, no, no, no” during the committee discussions. She concluded by saying she is still trying to understand how the calculation benefits the downtown.

Hohnke allowed that if parking enforcement is taken off the table, the committees need to talk about what else they might do and to look for “other opportunities for synergy.”

Sue McCormick cautioned that her understanding of the parking enforcement proposal had not been that it was to be “all or nothing.” There is nothing that prohibits the city from going back to look at the “flavor” of how parking is enforced. Even if it’s left out of the discussion of the parking agreement, she said, there are policy decisions about how parking is enforced that can be examined.

Collins stated that what is mutually beneficial is an important issue. He suggested that the city might be responding to the DDA by suggesting there is another way to implement the desired DDA parking enforcement policies other than having the DDA manage enforcement. Perhaps it would turn out that the DDA has input on how existing service is executed.

DDA Does Development

Hewitt drew a parallel between Collins’ concluding sentiments about the DDA having input on an existing mechanism by transitioning to the fourth key point on the term sheet – the DDA having an active role in the development of city-owned surface parking lots downtown.

Collins noted that he knew there is one DDA board member who’d be happy to see parking enforcement taken off the table and to use the purchase of land, which the DDA would then develop, as a mechanism for the DDA to make payments to the city. Collins was alluding to Newcombe Clark. From previous Chronicle coverage “Possible Topic: Should the DDA Develop City-Owned Land“:

The DDA could have said, “Here’s $2 million and we’ll buy two lots,” or one lot – like the Palio’s lot at William and Main, suggested Clark. [The parcel currently serves as a surface parking lot.] Even though the DDA had elected not to do that, and instead decided to renegotiate the parking agreement, Clark said he thought that land purchase was still worth exploring.

Hewitt acknowledged that a land-purchase type approach is another way it could be done, then quipped that the city could simply give the DDA the Kline’s lot, which the DDA had bought in the first place.

DDA Development: Pollay’s Outline

As part of the timeline for the two committees’ summer work plan, Pollay is to deliver a plan for what it would mean for the DDA to take an active role in the development of city-owned surface parking lots. She’s due to present that at the committees’ Sept. 13 meeting. On Monday, she handed around a one-sheet double-sided sketch of an outline for what she was working on.

The outline includes a chunk devoted to visioning with multiple and various parties and the public to develop a comprehensive strategy for downtown. The idea is not to start from scratch, but rather to build on work that the community has done for the last five years.

She cautioned against the idea of “master planning by RFP” for a particular site. When there’s a comprehensive strategy in place – as opposed to the “piecemeal” approach that has been taken previously – then it makes sense to begin talking about a request for proposals (RFP) for some specific site that’s been prioritized, she said.

The process for an RFP for the first site includes drafting of the RFP by the DDA, with revision by a professional consultant who would oversee distribution of the RFP to potentially interested parties. An advisory committee to review the responses to the RFP would be selected by the DDA, with members appointed based on strategic strengths – like project financing experience. The advisory committee would move the project through a process of reviewing the responses, interviewing the proposers, and making a recommendation to the DDA. On approval by the DDA board, the recommendation would be forwarded to the Ann Arbor city council. The city council would either approve the project or give some other direction. If the outcome were approval, the DDA, with the aid of a consultant, would do the negotiations with the developer on a specific agreement and forward the plan to the city council for approval.

The idea, said Pollay, was to put the DDA at the “edge of the sword” so that her organization would “take the heat” from the community.

Taylor said he agreed with the “march towards expertise” that Pollay had outlined for the advisory committee membership. However, he cautioned that this kind of expertise should be added to, rather than replace, the kind of participation that has been typical for such committees.

Next Meeting: Sept. 13

As the meeting concluded, Carsten Hohnke wanted to get an idea of what the agenda for the Sept. 13 meeting would be like. At least three points will be covered:

• How are Michigan Vehicle Code infractions handled in other communties?
• What are meter revenues like for the newly-installed city meters outside the DDA district?
• What does “active role” for the DDA mean in development of downtown city-owned surface parking lots?

In early summer 2010, committees from the DDA board and the Ann Arbor city council set out a schedule of monthly meetings to renegotiate that contractual parking agreement.

Susan Pollay, executive director of the Downtown Development Authority, takes notes at the end of the table an hour and a half into the July 12 meeting of committees from the city council and the DDA. On the white board behind her is the timeline worked out by the committees that led to the scheduling of additional meetings. (Photo by the writer.)

Faced with a target of Oct. 31, 2010 for a completed contract, the two groups – known as the mutually beneficial committees – have now increased the frequency of their meetings to twice-monthly. At the June 14 meeting, it was agreed that staff members from both the city and the DDA would attend future committee meetings, and that staff would prepare a matrix of policy points related to the parking system.

But at the July 12 meeting of the two committees, the matrix of policy points had not yet been prepared and no city staff were present. Susan Pollay, executive director of the DDA, attended the July 12 meeting as the DDA staff representative. And Pollay led the committees through a calculation backward from the Oct. 31, 2010 target date, which showed that an outline of the agreement needed to be ready by the very next monthly meeting – then scheduled for Aug. 9.

When committee members apparently teetered on the edge of abandoning the Oct. 31 target, Pollay gave them a nudge, tilting them back to terra firma. She was prepared to work with a sense of urgency, if that is a priority, Pollay told them – but if they already wanted to push past the deadline, then she was content to take it easy, too.

Committee members responded by deciding to add extra meetings to the schedule. Besides scheduling issues, the July 12 meeting also focused on: (i) contractual aspects of the current parking agreement that had possibly been overlooked in recent city council decision-making; and (ii) the appropriate length of the term and monetary consideration in the new contract.

On July 26, the two committees held an extra meeting, this time joined by Sue McCormick, the city’s public services area administrator. The task of creating the parking policy matrix had been taken on by Pollay, who had then worked with McCormick to produce a chart that included the city’s recommendations along with DDA suggestions.

The next regular meeting – the second Monday of the month – falls on Aug. 9, with an additional meeting planned for Aug. 23.

Parking Contract Background

Under the parking contract signed between the city and the DDA in 2005, the DDA was to pay the city of Ann Arbor $1 million per year through 2010 as rent for the city’s facilities. The city had the option to request up to $2 million in payment in any given year, provided that the total for the contracted period did not exceed $10 million. But in each of the first five years of the contract, the city requested and received $2 million from the DDA.

The city’s FY 2011 budget plan, which was developed as part of the two-year budget planning cycle for the FY 2010 budget, included an additional $2 million payment from the DDA that was not required under the parking contract.

Although the city adopts budgets only one year at a time, the two-year planning cycle already made it clear: the city expected the DDA to pay more than the contract stipulated. So in January 2009, as the city council began its work on the FY 2010 budget, the city council passed a resolution that called upon the DDA to begin a conversation about revising the parking contract in a “mutually beneficial” way.

Then in July 2009, the city council appointed members to a committee that was to talk with a corresponding committee of the DDA board about amending the contract under which the DDA manages the city’s parking system.  Through the end of 2009, the two committees did not meet in public view. Then, in early 2010, a group of councilmembers and DDA board members worked outside of any committee structure, and out of public view, on a term sheet for the contract revision, which was finally made public in late April 2010.

That term sheet was the good faith basis on which the DDA board, on a 7-4 vote in May, decided unilaterally to amend the parking contract. That unilateral amendment amounted to a payment from the DDA to the city of an additional $2 million that had not been required under the existing contract. The city used the $2 million to modify the budget for FY 2011, which began July 1, 2010.

In May 2010, the city council appointed a second committee to take discussions forward based on the term sheet.

Members of the council’s committee are Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). Representing the DDA are Sandi Smith, Russ Collins, Roger Hewitt and Gary Boren. Smith is also a city councilmember, representing Ward 1.

A timeline overview of events through this week:

• 2009: Background and overview of 2009 events in previous Chronicle coverage [link]
• January-April 2010: DDA board member Roger Hewitt reports at monthly DDA board meetings that only informal discussions are taking place.
• April 16, 2010: The Ann Arbor Chronicle is barred from attendance at a meeting of a “working group” of city council members and DDA board members.
• April 21, 2010: At a DDA partnerships committee meeting, Newcombe Clark gets assurance that a 7-day notice would be given before the full board would be asked to consider a $2 million transfer payment.
• April 28, 2010: At a DDA operations committee meeting, a “term sheet” produced by the “working group” of the city council and DDA is unveiled. It’s intended to become the basis for an eventual new parking agreement. A key feature of the “term sheet” is that the DDA will assume responsibility for enforcement of parking meters. Chronicle coverage: “DDA to Tie $2 Million to Public Process”
• May 5, 2010: DDA board approves the unitlateral amendment of the contract with the payment of an additional $2 million to the city. Chronicle coverage: “DDA OKs $2 million Over Strong Dissent“
• May 17, 2010: Ann Arbor city council accepts $2 million from DDA, makes budget amendments that reduce city-administrator-proposed layoffs in fire and police departments and eliminate cuts in human services funding. The council appoints a second “mutually beneficial” committee. Chronicle coverage: “City’s Budget Takes Backseat to DDA Issues“
• May 28, 2010: City council’s mutually beneficial committee meets; DDA board holds retreat to discuss term sheet. Chronicle coverage: “Ann Arbor DDA: Let’s Do Development“
• June 14, 2010: Joint meeting of the two “mutually beneficial” committees of the DDA and the city council. Chronicle coverage: “Parking Deal Talks Open Between City, DDA“
• July 6, 2010: City council work session on the topic of city-DDA parking agreement.
• July 12, 2010: Joint meeting of the two “mutually beneficial” committees of the DDA and the city council.
• July 26, 2010: Joint meeting of the two “mutually beneficial” committees of the DDA and the city council.

July 6 City Council Work Session

Just prior to the July 6, 2010 city council meeting, councilmembers held a work session to get an update on how things stood with the mutually beneficial committees.

Based on the council’s latest briefing as a group, the guiding principles of the conversations between the two committees were the term sheet points:

In bullet-point form, the key elements of the term sheet for discussion were these:

• Parking Enforcement: DDA assumes responsibility for enforcement of parking rules.
• Code Enforcement: DDA assumes responsibility for enforcement of other community standards codes (e.g., sign violations).
• Services: DDA assumes responsibility for various services in the downtown.
• Development: DDA assumes responsibility for development of city-owned downtown surface parking lots.

As Christopher Taylor (Ward 3) reported to his council colleagues at the July 6 work session, the consensus that had emerged from the DDA committee and the discussion at the DDA board retreat was that the DDA was disinclined to take on responsibility for enforcement of non-parking related codes. Taylor suggested, “Let’s engage their disinclination to do it … if no one says, ‘We simply must have them do it.’”

So the tentative proposal is to have separate enforcement staff for parking and for non-parking codes.

Work Session: Separate Forces?

Stephen Kunselman (Ward 3) has, from the start, expressed dissatisfaction with the idea of the DDA enforcing city codes of any kind, using the phrase “shadow government.” At the work session, he reiterated his view that the DDA should not perform non-parking code enforcement, and asked how this was any different from parking codes. City administrator Roger Fraser clarified that parking codes relate specifically to vehicles on the street, but that other codes – those the DDA does not want to enforce – involve building codes, trash, debris, weeds, sight distances, nuisance complaints and the like.

Kunselman wanted to know if different staff currently enforced the different categories of codes. Fraser indicated that years ago the two different kinds of codes were enforced by different staff – now they’re all enforced by community standards officers.

Carsten Hohnke (Ward 5) wanted confirmation on a question he’d raised at the June 14 meeting: Was there any economy to be gained by having the same staff enforce parking codes and other codes? Taylor indicated that he’d received a response from city staff that it’s not a consideration they need to worry about.

Mayor  John Hieftje expressed concern that they were starting to talk about two different enforcement entities operating in the downtown area. He said that based on conversations with the deputy police chief, he thought it would be much easier to train the current community standards officers who do parking enforcement to implement enforcement in the specific ways that the DDA had in mind – to make them “ambassadors” for the downtown. He said that it made sense to invest in training the people we already have.

Taylor sought to distinguish between the staffing of the parking enforcement system versus policies on parking. Hieftje indicated that policy was set by the city council.

Sandi Smith (Ward 1) indicated a desire to pursue the dual-force option, noting that currently a police officer can write a parking ticket, as can a community standards officer.

Fraser weighed in by saying that it is important to determine what they wanted to accomplish before deciding how they’re going to accomplish it – with one force or with two. Focus on what before we get to how, he said. Invited by Smith to explain what they wanted to accomplish, DDA board member Roger Hewitt characterized the goal as minimizing the unpleasant aspect of people getting an expired meter ticket. Now it’s under the police and it’s revenue-driven. What the DDA is suggesting, he said, is that they want to maximize compliance with the parking regulations, which are an important part of a larger transportation system.

Questioned by Margie Teall (Ward 4) about whether it mattered who did the enforcement, Hewitt said he felt the key was who the enforcement staff report to. If they report to the police, he said, that has implications for the culture of enforcement. The policy and enforcement culture, he said, needs to be under one organization.

If the goal is not to write tickets, Kunselman wondered why the city was charging for parking at all. He reported that he was recently in Naperville, Illinois, where parking downtown is free. He indicated that he did not even want to partake in a discussion of allowing the DDA to enforce parking meters outside the DDA area. For the DDA to provide parking enforcement, he said, it would water down their true responsibility, which is downtown development.

Kunselman asked what the current problem was that could not be addressed by adjusting meter rates and times. He did not see a reason to create a second force.

Hewitt pointed out that the DDA already does manage meters outside the DDA boundaries. Hieftje said that as long as they were giving instruction to the committee, that for his part – speaking as a member of both the city council and the DDA board – he felt they should retrain the same force the city already had.

Kunselman expressed his view that the DDA didn’t need council direction to hire downtown ambassadors, if that’s what they’d like to do.

Sabra Briere (Ward 1) indicated that she thought the parking policy report that the DDA had recently generated at the city council’s request was “a fine beginning” and that would be an opportunity to have a discussion on parking policy.

Work Session: Services?

Taylor noted that another area of discussion for the two committees was the provision of services in the downtown area by the DDA – pruning trees and the like. Kunselman wondered what that would mean, given that a business improvement zone (BIZ) had just recently been established for the Main Street area. Would the DDA expect compensation for those services?

Taylor responded by saying that the overriding consideration is that the city would be “held harmless” in the agreement. Hewitt confirmed that “holding harmless” was a concept that applied – to both sides. The underlying assumption, he said, is that the DDA would pay the city for use of its parking facilities and that if the DDA could reduce the costs to the city through provision of certain services, then that reduced cost would be factored into the payment made by the DDA to the city.

Work Session: DDA Does Development?

Returning to the points listed out on the term sheet, Taylor noted that there was a great deal of interest on the DDA’s part in taking responsibility for development of city-owned property in the downtown area.

Hewitt confirmed the interest, but noted that there are a number of different opinions about what that might entail – it would not mean that the DDA would take over the decision-making process, however. It would mean that a more comprehensive approach would be taken, as opposed to the ad hoc approach. He said they’d look at some economic studies of the mix of retail, dining, and entertainment that currently exists in the downtown and explore what kinds of other businesses would continue to support that. He also indicated that the DDA would bring in some real estate expertise.

Hewitt indicated there would be extensive public process, with the identification of public goals for the property. He stressed that it would be a step-by-step process with city council approval at each step along the way. He estimated that the entire process of development would take many years. He confirmed for Taylor that the DDA’s executive director, Susan Pollay, had been tasked with providing a somewhat more detailed architecture of the DDA’s plan for being the development engine for the downtown.

Briere ticked through a number of questions for Hewitt. Would this entail the development of RFPs (requests for proposals) and RFQs (requests for qualifications)? Would it involve consultants to develop those RFPs and RFQs? Would it involve public meetings before such documents were crafted? Yes, yes, and yes came Hewitt’s answers in turn. Hewitt pointed to the public process as a requirement, given the DDA’s status as a public body.

Kunselman wanted to know if the development activities by the DDA would also be incorporated into the parking agreement. Hewitt indicated that that was considered to be a separate issue. The DDA had already authorized supporting a consultant for the city-owned Library Lot development, Hewitt noted. He indicated that the future development activity by the DDA would be funded out of the TIF (tax increment financing) capture.

Kunselman said that one of the things he’d like to see the DDA do is focus more on development of public buildings downtown. He indicated that he did not feel the DDA needed city council direction to do that. The DDA could approach the Ann Arbor District Library or the Ann Arbor Housing Commission to talk about supporting projects of those two organizations, he said. Those things are already within the DDA’s mission, he concluded.

Hewitt pointed out that because the city owned the parcels in question, it was necessary to have city council’s sanction and cooperation. Briere suggested that the operative term was “city-owned property” rather than “public property” – that’s why Hewitt would say the DDA needs to have the city council’s cooperation, she said.

Hohnke echoed the idea that it was valuable to take a broad and comprehensive look at the city’s downtown parcels.

In response to a question from Kunselman about the city planning commission’s role in the development activity, Hewitt indicated that everything would still have to go through the planning commission process. He said that the existing decision-making bodies would certainly continue to exercise those decisions.

Note: The city council work session was sparsely attended – by Hieftje, Smith, Briere, Taylor, Kunselman and Hohnke.

July 12 Committee Meeting

The July 12, 2010 meeting of the two mutually beneficial committees began with the small talk of initial morning encounters. In attendance were Susan Pollay, Russ Collins, Sandi Smith, Roger Hewitt, Carsten Hohnke, Christopher Taylor and Margie Teall.

July 12: Staffing of Parking Enforcement

Small talk evolved into a discussion on the point of the staffing of parking enforcement positions. Roger Hewitt allowed that mayor John Hieftje’s point made at the council working session – that existing staff could be trained in the kind of approach the DDA would like to see – had some merit. But Hewitt came back to his view that it’s a matter of who those employees report to. The priorities of the parking enforcement staff are ultimately determined by the organization they report to, said Hewitt. The priorities of the city government – revenue – are not the same as the priorities of the parking authority, he said.

July 12: Where’s City Staff?

At their June 12 meeting, attended only by committee members, the two committees had agreed that staff from both organizations would attend all future meetings. Collins asked where the staff were. “That’s why Susan [Pollay] is here,” was the answer. For the city, however there were no staff present.

As the conversation seemed to be turning towards a discussion of revenues from parking rates and fines, Pollay suggested: “The tough part is not revenue; the tough part is expenses.” She then noted that the committees had until the end of October to complete the contract.

July 12: What’s Our Deadline?

Pollay’s mention of the October deadline prompted Collins to ask if the real estate development piece of the term sheet would also fall under the committee’s purview. Teall wanted to know if the Oct. 31 deadline reflected the time when the committee finished its work – with the contract to be considered by the council in November. Or did it reflect a target for having the contract signed and ratified by the respective bodies? Based on the term sheet and the resolutions passed by the respective bodies, the target was a completed and signed contract by Oct. 31.

Taylor suggested that “lawyer time” needed to be built in. Calculating back from October, Smith suggested that by September something needed to be ready for legal staff to review. Taylor objected, saying that legal staff “are not reviewing it, they’re drafting it.”

July 12: Who Drafts the Contract?

The committees then entertained the question of which legal counsel should draft the agreement – Jerry Lax, with whom the DDA contracts for legal services, or the city attorney’s office. Smith suggested it’d be faster if Lax did the work. Hewitt agreed that the private sector has a reputation of being more efficient. Hohnke suggested that Lax would simply be more familiar with the various DDA parking issues.

Collins declared that there was a consensus that Lax should do the drafting. The question then became: How long does Lax get? Hewitt suggested that after the next meeting in August, the committees would turn over to Lax what they had, so that Lax could tell the committees what additional information he needed.

Smith suggested that Tom Crawford, the city’s CFO, needs to be looped in on the process. Hewitt agreed that Crawford needed to be part of the conversation with respect to the dollar amounts and the length of the contract term.

July 12: Where’s City Staff (Redux)?

At the mention of Crawford, a city staff member, Collins then returned to the earlier question: Where’s someone from the city staff today? Teall indicated that she had not talked to anyone. There was a brief discussion of the role that Sue McCormick, the city’s public service area administrator, might play.

July 12: Brief History of the Contract

Pollay and Hewitt then reviewed some of the basic points of history of the relationship of the DDA to the city’s parking system.

The DDA was in some sense born out of parking – the initial projects in 1982, when the DDA was created, included the Ann-Ashley and the Tally Hall structures. In 1992, the city and DDA agreed that there were problems with several of the city structures that could be addressed by using the DDA’s TIF capture. The DDA took over management of seven structures and three lots, and approved a repair plan for an estimated $6 million. That cost eventually grew to $25 million, with the final price tag amounting to around $40 million. The DDA had then lobbied for the management of the on-street meter system as well, Pollay said – that’s part of the system that is profitable and can help fund the overall system.

In 2002, the city and the DDA struck an agreement that provided for DDA management of street metered spaces, with a rent payment by the DDA to the city of $100,000 per year. In 2005, Pollay said, the DDA voluntarily approached the city, noting the financial difficulties the city was experiencing, and offered to increase the rent payment to $1 million per year, with the option for the city to draw $2 million in one year as long as the total over 10 years did not exceed $10 million.

Hewitt added that the DDA is responsible for all of the debt service on the parking decks, their maintenance, plus the utilities in and around the decks.

Pollay, noting the 10-year term of the contract, suggested there is a cultural difference between the DDA and the city. The city doesn’t have the luxury of thinking that far into the future, she said, but that’s how the DDA does its planning. Hewitt agreed that because the DDA bonded to pay for construction of parking structures, it is important to make long-term plans.

July 12: The Contract as a Contract

Pollay concluded that from the DDA’s point of view, the parking agreement between the DDA and the city acts as a contract. She said that historically, the city did not seem to view the agreement as acting like a contract. Pointing out that the state enabling statute for DDAs makes the DDA a separate entity from the city that can sue and be sued, she expressed concern that the parking agreement be established on both sides as a contractual relationship.

As one example, she pointed to the language of the agreement, which stipulates that the DDA is to manage “the” parking system. [The ordinary understanding of the definite article in English includes some sense of uniqueness.] In early 2009, when the city staff elected to pursue a strategy of installing parking meters in residential areas outside the DDA district, that was not consistent with the contractual language of the city-DDA parking agreement, Pollay said. Revenues from the parking meters in “the city’s parking system” are, per the contract, supposed to be received by the DDA. Given that the city was looking for ways to make up revenue shortfalls for the FY 2010 budget at the time, Pollay said that the DDA weighed whether or not to “make a stink.” Instead of challenging the city’s move based on the contract, Pollay said, they’d expressed their skepticism that the additional meters would actually generate the kind of revenue that the city was hoping for.

Pollay also pointed to the impact on the city’s labor unions. When the city moved meter revenues and responsibility for collecting coins from meters to the DDA in 2002, the city had told the city’s unions that they were basically no longer in the parking business. Installation of additional meters with revenues to be collected by the city meant that the city was back in the parking business, she said.

The $1 million rent payment specified by the contract, Pollay pointed out, was based on a specific inventory of parking spaces. If the basis of the contract is changed – i.e., if the inventory is changed – the contract needs to be re-examined. Pollay then pointed to places where the parking inventory had been decreased, without revisiting the contract, including the First and Washington structure.

Hewitt weighed in on the contractual aspect of the agreement by saying that if the view of the city was that the DDA was merely an arm of the city, as opposed to an entity that could enter into contracts with the city, then the committees were wasting their time.

July 12: Does Fuller Road Station Get Covered by the Contract?

Hewitt then broached the subject of the proposed Fuller Road Station – would that facility be included in the revised parking agreement? Teall indicated that there would be “huge pushback” if the DDA were assigned responsibility for managing that facility outside the DDA district. Pollay pointed out that the DDA and the University of Michigan already partnered on the Forest parking structure, which is located outside the DDA district.

July 12: Back to the Timeline and Where’s City Staff (Re-redux)

Collins then noted that the “grim reality” is that there were three meetings left to resolve a very complex issue. He reiterated that he was “pretty distressed there’s no city staff person here.” Taylor indicated that the desire for a city staff person to be present had been relayed to the city: “That was communicated – I don’t know what happened.” Collins mused that it was a matter of the budget season being over and the pressure from that being off – and now there is an election campaign underway. He noted that the DDA staff is tiny, and while the city staff is larger, they are overworked. Collins concluded by saying if they were to have a rough draft ready in August, then their committees needed to “battle through it.”

July 12: A Chart with Columns

The conversation then turned to what was needed to get the committees “off square one.” Taylor sketched out in words what he thought was needed: a chart with columns. The leftmost column would indicate all the points of entry into the parking system, he said, one point of entry per row. The next column over would indicate the DDA’s current responsibility. A third column should indicate the city’s current responsibility. Subsequent discussion indicated that there should also be columns for recommendations by the DDA and by the city for changes in the current arrangement for how the elements of the parking system are handled.

July 12: Can We Hit the Deadline?

With Pollay offering to complete the chart by July 26, Smith described that day’s committee meeting as “a wash.” Sentiments from Teall suggested that the Oct. 31 deadline might not necessarily be solid. At that, Pollay told the committee members that if the Oct. 31 deadline is a priority, then she was prepared to work urgently. But if they already wanted to push past that deadline, she said, “I can take it easy, too.”

Collins suggested that the chart with the columns of recommendations by the DDA could be forwarded to the city staff by July 19 – with July 26 as a target for the commitees actually meeting again. It would be great, Collins said wishfully, if the two columns containing the city’s and the DDA’s recommendations were identical. The committees confirmed July 26 as an additional meeting date.

July 12: Let’s Be Productive: Time, Money, Amnesia

To that point in the meeting, the concrete progress made by the committees could be fairly described as (i) assigning Pollay to do a task, and (ii) scheduling an extra committee meeting. Hohnke, reacting to the apparent willingness of others to let the meeting end there, noted that there were some things they could talk about in the absence of the chart that Pollay would be creating.

For example, Hohnke said, they could talk about the length of the new agreement. Collins suggested, half-jokingly, that given the DDA’s 30-year renewal in 2003, he’d like the parking agreement to run through 2033. “I want 2033! What do you guys want?” he asked.

The back and forth suggested that there might be consensus around a 10-year agreement, based on the previous agreement and the DDA’s preference to work with a 10-year plan.

The conversation then lost some of its focus on the term of the agreement and took a path through what the scope of the agreement should include: loading zone permits, Fuller Road Station?

Hohnke alluded to some of Pollay’s previous remarks about topics that the current agreement already addressed but that had not been treated by the city as contractual obligations. Those had been instances of “institutional amnesia,” he said. The new agreement needs to reinforce what was covered in the original 2002 agreement as a contract, he said – the parking system.

Taylor was keen to draw a distinction between the rest of the parking system and the future Fuller Road Station: “But Fuller is different,” he declared. Hewitt responded by saying that the parking agreement should not automatically exempt something from being covered. If Fuller Road Station materializes, Hewitt said, the city-DDA contract should apply to it. Taylor countered by saying he did not feel that Fuller Road Station should automatically be handled by the parking agreement between the city and the DDA.

Smith pointed out that the DDA already had experience working on a joint UM venture – which Fuller Road Station is proposed to be – in the form of the Forest parking structure. It’s a joint facility and the DDA has the expertise in managing such a facility. Smith concluded it would be wise to tap the DDA expertise to manage Fuller Road Station, even if it were not in the contract.

A brief discussion of the dollar amounts involved in the new parking agreement showed a consensus that it should be some kind of percentage based on either gross or net revenue of the parking system.

July 26 Committee Meeting

At the July 26, 2010 meeting, initial small talk among early arrivees focused on the trolley used at the art fairs, and comparisons to the now defunct LINK. In attendance were: Susan Pollay, Sue McCormick, Sandi Smith, Roger Hewitt, Christopher Taylor and Margie Teall.

July 26: The Chart with Columns – Exactly Right

The handout for the meeting included the requested chart with columns. Taylor led off by saying, “Thank you, this is exactly right.” Rows in the chart were as follows:

1. parking structures – cashiered
2. parking lots: city owned – cashiered
3. parking lots: leased – cashiered
4. parking lots: city owned – parking meters
5. parking lots: city owned – monthly permit
6. parking lots: leased – monthly permit
7. on-street parking meters – DDA district
8. on-street parking meters – outside DDA district
9. enforcement of UM parking facilities
10. meter bags – on street and off street
11. off-street moped and motorcycle parking spaces
12. bicycle parking (bike lockers, sidewalk, inside parking facilities, and on-street)
13. taxi stand spaces
14. loading zones – commercial, passenger drop off/pick up, staging
15. near downtown residential permits
16. special parking requests and actions
17. complaint calls
18. Fuller Road Station

Columns indicated DDA responsibility, city responsibility, DDA recommended changes, city staff recommended changes, with a blank column for the joint committee recommended changes.

Some of the current DDA responsibilities for parking structures – in addition to operation, maintenance and repairs – that were highlighted by Pollay included electricity costs for streetlights, snow removal for sidewalks and sidewalk repair costs.

Among the DDA staff recommended changes for structures were the enforcement of parking regulations, like no parking from 6 a.m. to 10 a.m. and parking in handicapped spaces without a sticker.

July 26: Parking Referees

A DDA suggestion that ran across several rows of the chart was that the DDA would be responsible for the parking referees. Sue McCormick explained that the city currently employs two parking referees – they hear appeals of parking tickets and make judgments on whether to grant those appeals. One of the referees is funded by the University of Michigan, she explained, because the parking referees hear appeals for UM tickets as well.

In explaining the rationale for the DDA’s desire to handle referee decisions, Pollay said it’s important for the referees also to understand the basic philosophy of the DDA’s approach to parking enforcement. Referees need to understand “the ‘why’ of it,” she said. McCormick noted that it was important that parking referees not make different judgement calls in similar circumstances – whatever philosophy the DDA had needed to be implemented at the point of ticketing.

July 26: Ticket and Appeals Data

Taylor wanted to know where and how most of the parking referee activity originated.

McCormick came to the meeting armed with various statistics on referee activity. From the last year, the contested tickets for city and university cases had the following distribution:

REPORT PERIOD FROM 07/01/2009 TO 06/30/2010 

PARKING VIOLATIONS REFEREE REPORTS 

University CASES ONLY 

Complaint Type    Tickets     Dollar Value
                  Contested   of tickets

Referee Session     1,006     $27,318
Mail                2,798      71,778
Contact Only          339       3,534

Tickets Denied      1,210     $30,824
Tickets Reduced       550     ( 5,083)*
Tickets Voided      2,095     (54,286)

*from $13,517 to $8,434       

Totals      Reasons for Void 

#1    110   Officer Error
#2      1   Defective Meter
#3      2   Emergency
#4     15   Improper Signs
#5      2   Official Business
#6    299   Special Permit
#7      4   U of M PTS
#8  1,254   U of M Policy on voids
#9    308   Referee's Judgment
#10     3   Deceased
#11     0   Vehicle Sold at Auction
#12     1   Unable to Locate
#13     2   Data Entry Error
#14     0   Stolen Vehicle
#15     0   Inclement Weather
#16    63   Defective Dynameter
#17    25   Public Relations
#18     0   PVB Coordinator's Judgment
#19     1   U of M DPS
#20     5   Housing
#99     0   Court Codes

==========

City Cases ONLY

Complaint Type    Tickets     Dollar Value
                  Contested   of tickets

Referee Session     1,365     $43,426
Mail                2,739      82,771
Contact Only          553       8,101

Tickets Denied      1,567     $50,048
Tickets Reduced       872     (10,454)*
Tickets Voided      1,746     (47,886)

*from $28,130 to $17,676     

Totals      Reasons for Void 

#1    174   Officer Error
#2     94   Defective Meter
#3      7   Emergency
#4     17   Improper Signs
#5      9   Official Business
#6    150   Special Permit
#7      0   U of M PTS
#8      8   U of M Policy on voids
#9  1,125   Referee's Judgment
#10     0   Deceased
#11     0   Vehicle Sold at Auction
#12     7   Unable to Locate
#13    20   Data Entry Error
#14     5   Stolen Vehicle
#15     1   Inclement Weather
#16   103   Defective Dynameter
#17    26   Public Relations
#18     0   PVB Coordinator's Judgment
#19     0   U of M DPS
#20     0   Housing
#99     0   Court Codes

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In terms of the kinds of tickets that were issued – regardless of whether they were contested or not – McCormick provided the following breakdown from city of Ann Arbor community standards tickets:

Total Parking Tickets    88,414
Expired Meter            60,866
Parked Over Legal Limit   5,997
No Parking Anytime        4,930
Loading Zone              2,412
Ahead of Setback Line       444
Parked On Walk              588
Blocked Drive             1,449
Handicapped Space           846
Fire Lane                    52
All Other                10,830

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The idea of the DDA handling referee sessions gained only marginal traction in the discussion. Taylor suggested that if a lot of the referee session originated in areas outside the DDA district, then maybe the city should handle it.

A historical point made by McCormick was that the appeal process was currently separate from enforcement – the city treasurer’s office handles appeals through its referees, while the tickets themselves get written by community standards officers, who are part of the police department. They’re separate, McCormick said, because they used to be under the police department and there was a consensus that enforcement needed to be separate from appeals. What the DDA was suggesting was a return to a scenario that had previously been perceived as flawed – combining enforcement with appeals

Hewitt suggested laying aside the issue of referees.

July 26: Ticket Collection, Single Contact Point

Pollay brought up the issue of ticket collection – it’s currently handled by a company in New York. She suggested that downtown banks might bid on providing that service. Smith advised that part of the reason for the current arrangement was that the company had an arrangement with a half-dozen other states that allowed them to track down tickets owed by UM students who accumulated them, then left town with the tickets unpaid.

A key idea that floated through the whole conversation was a need to present a single point of contact to the public for the parking system. There is a challenge inherent in having two organizations involved – the city and the University of Michigan. What they’re now contemplating is adding a third organization in the form of the DDA. McCormick noted that the physical form of the tickets themselves indicated the two different authorities of the city and the university.

Pollay returned to the issue of the tickets themselves by suggesting that the physical form could be improved to be “friendlier.” Currently, she said, the envelope simply listed out the fine amounts. For many visitors, she cautioned, that envelope makes a lasting impression of what they think about Ann Arbor.

July 26: Council Authority on Rate Increases

In the course of the committee discussion, Hewitt returned to a theme that would need to be addressed independently of any renegotiation of a parking agreement: council approval of parking rates in the context of flexible pricing schemes associated with transportation demand management. As an example, he suggested that the DDA would not be enthusiastic about getting council approval to change the hourly rate on one level of a particular deck by one dime. Some kind of average, Hewitt said, would need to be offered to the council for approval.

Smith also cautioned against the city council’s possible “micro-managing” by saying: “It’s like the city council making a decision on an AATA bus route.” That remark was met with an animated response from Teall: “Would we do that?!” Replied Smith, “Precisely.” Smith meant that the same negative reaction Teall had displayed to the city council weighing in on AATA bus routes was the same reaction that would be appropriate for the city council micro-managing parking rates.

July 26: Rights to Enforce

One outstanding issue that will receive more analysis before the next committee meeting is the legal ability of the city to grant the right to enforce parking rules to the DDA. It was discussed that the preliminary view offered by Mary Fales, one of the assistant city attorneys, is that she can find nothing that would justify providing the DDA with that authority.

Pollay offered her view that Fales was possibly confining her scope of analysis to the state enabling legislation for DDAs – one would not necessarily find an explicit conferal of a right to enforce parking in the state enabling legislation, in order for it to be legal.

By the next committee meeting, additional analysis by the city attorney’s office plus the DDA’s legal counsel, Jerry Lax, is to be done.

What’s Next

The two committees are currently scheduled to meet again on Aug. 9 and again on Aug. 23. However, there was some uncertainly on the city council side, expressed by Teall, about whether she or Hohnke would attend. She cited the fact that the date fell after the Aug. 3 primary election.

The two groups are known as the “mutually beneficial” committees, reflecting the language of a January 2009 city council resolution that called upon the DDA to begin a conversation about revising the parking contract in a “mutually beneficial” way.

On Monday morning, for the first time in public view, members of the DDA board and the city council met to discuss the contract.

The two mutually beneficial committees (starting at the far right of the frame, proceeding clockwise around the table): Carsten Hohnke, Margie Teall – both city councilmembers; Sandi Smith, city councilmember, but representing the DDA; Christopher Taylor, city councilmember; Roger Hewitt and Russ Collins, both on the DDA board. (Photo by the writer.)

The basis of these further discussions was a term sheet that had been produced in late April by some members of the city council and the DDA working outside of either body’s committee structure.

That term sheet had been the good faith basis on which the DDA board, on a 7-4 vote in May, voted to amend the parking contract. That unilateral amendment amounted to a payment from the DDA to the city of an additional $2 million that had not been required under the existing contract.

The specific outcomes of Monday’s meeting between the two committees were: (i) staff for the DDA and the city would be asked to develop a list of policy points that would need to be addressed in order for the DDA to assume responsibility of enforcing parking rules, but not other codes; and (ii) the DDA would be asked to develop a detailed plan by Sept. 13, 2010 describing the role of the DDA in the development of city-owned surface parking lots within the DDA district.

The planned schedule for meetings between the two committees will be the second Monday morning of each month at 8:30 a.m. at the DDA offices on Fifth Avenue. Members of the council’s committee are Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). Representing the DDA are Sandi Smith, Russ Collins, Roger Hewitt and Gary Boren.

Who Was There

All members of the committees attended except for Gary Boren on the DDA’s committee. Besides The Chronicle, in the audience was Maura Thomson of the Main Street Area Association.

There was no discussion of the objections raised at the city council’s May 17, 2010 meeting to Sandi Smith’s participation on the DDA’s committee. Smith serves on both the DDA board and the city council. Those objections had been raised by Marcia Higgins (Ward 4) and Stephen Rapundalo (Ward 2). Their objections were countered at that council meeting by mayor John Hieftje and Margie Teall (Ward 4):

Higgins then expressed concern about Smith sitting on another body’s committee that was having discussions with the city council.

Smith was quick to respond to Higgins’ remarks by indicating that if there was a strong feeling on the part of the city council, then she would resign her committee membership on the DDA’s mutually beneficial committee. However, she told Higgins that she’d thought about the issue a lot. Smith said she felt she had an opportunity to provide insight into both organizations. She also said that up to that point, she had helped the two organizations get past some historical hard feelings – she characterized it as a “clash of cultures.”

Smith said the DDA may or may not be interested in doing any of the items listed on the term sheet. Smith then floated the idea that both the city council and the DDA board would meet together as entire bodies.

Higgins picked up on Smith’s offer to resign from the committee by indicating she wanted to request that Smith not be a member of the DDA’s mutually beneficial committee. Rapundalo echoed Higgins’ request, saying he meant no disrespect to Smith. However, he said that if she were removed from that committee, he would be more comfortable.

Hieftje noted that Smith brought a great deal of knowledge to the work.

And Teall echoed Hieftje’s sentiments that Smith’s skills and knowledge would be useful. Hieftje also suggested that the work going forward should not be thought of as a negotiation but rather a conversation.

Teall was appointed to the council’s mutually beneficial committee in summer of 2009 along with Carsten Hohnke and Leigh Greden, who represented Ward 3 at that time. Teall and Hohnke’s appointments to the council’s mutually beneficial committee at the May 17 meeting was thus their second time to be appointed to such a committee.

Not present at the discussion on Monday morning were any staff members from the city or the DDA.

Opening Discussion

The group spent the opening moments of the meeting reciting familiar facts – the term sheet produced by the working group had been acknowledged by both the city council and the DDA board as a basis for further discussions. As chair of the DDA board’s committee, Sandi Smith took the lead in reviewing the results of the recent retreat, which the board had held to discuss the term sheet.

Opening Discussion: Term Sheet

In bullet-point form, the key elements of the term sheet for discussion were these:

• Parking Enforcement: DDA assumes responsibility for enforcement of parking rules.
• Code Enforcement: DDA assumes responsibility for enforcement of other community standards codes (e.g., sign violations).
• Services: DDA assumes responsibility for various services in the downtown.
• Development: DDA assumes responsibility for development of city-owned downtown surface parking lots.

There were some additions to the term sheet at the DDA retreat, Smith reported. But with respect to the items already on the term sheet, she said, there was “not really stomach” to do code enforcement. If the DDA had no ability to establish the code, she said, the sentiment was that the DDA would be set up only to be “the bad guy” – not something the DDA was interested in doing. In addition, she said, she didn’t think there would be a lot of financial savings.

Opening Discussion: No Deals Already Cut

Russ Collins led off his contribution to the discussion by cheerfully saying that he would like to make “a posturing statement for the media and the citizens attending today.” Collins then stressed that the discussion was “an open dialogue” – there were preliminary discussions where the group had been exploring possibilities, but “no deals were cut.”

The idea that no deals had already been cut, Collins continued, was made clear from the fact that when the entire DDA board and the city council had looked at the term sheet, there had been some reaction among other members along the lines of “I don’t know if we want to do that.”

Collins noted that they were just volunteers who were public servants who were trying to do the best job possible for the citizens. [Editor's note: While DDA board members like Collins are appointed and are not compensated financially for their work, city council members are elected and paid an annual salary of $15,913.]

Teall added to Collins’ “posturing statement” that she felt the term sheet was a “great framework” for the discussion.

Opening Discussion: Basic Premise Is that DDA Manages Parking

Hewitt noted that there were not a lot of additional items that came up during the retreat, and there was one item about which there was not a lot of interest in pursuing – code enforcement. He emphasized that something not explicitly discussed – perhaps because everyone just assumed it – was that the DDA would continue to be in charge of management and operations of the parking system throughout the city.

Consolidation of Parking Management, Enforcement

The two committees dove fairly straightaway into discussing the idea that parking enforcement could be added to the existing DDA responsibility of managing and operating the parking system.

Parking Consolidation: DDA Handles Parking

It should be a single entity that handles the management and the enforcement of parking, Hewitt said – that was the basic assumption underlying the idea that the DDA would assume responsibility for both. Teall asked if it meant that parking enforcement would be done throughout the city, not just downtown.

That brought the conversation to a brief halt. Collins responded by saying, “I don’t know that there’s an answer to that.” He said that his understanding was that parking enforcement outside of parking districts would essentially be accomplished by the community standards officers – there are not meter attendants who cover the whole city.

Smith noted that the DDA currently operates parking meters outside of its tax increment finance (TIF) district, so the idea was not that the district would be an absolute boundary. Hewitt gave an example of something that the DDA did not want to pursue: There are “no parking” signs out near West Stadium Boulevard on a side street in the vicinity of the Dairy Queen that’s outside the DDA district – the DDA doesn’t want to go out and write tickets there.

Christopher Taylor’s characterization was accepted by the others around the table: “DDA-managed parking will be enforced by the DDA.” Smith offered the example of residential parking permits as a “gray zone” – community standards were not likely to take that on, she said.

Hewitt reasoned that the DDA was not doing code enforcement inside the DDA district – there was no board support for that. But there would be code enforcement by community standards staff outside the DDA area, so it would be possible for community standards officers to do parking enforcement outside the district too.

Collins noted that the spirit of previous discussions was essentially that neighborhood parking discussions were a complex matter, and it was important to have an opportunity for political input from the citizens. Hewitt labeled the issue as a “question that needs to be answered” and suggested that there was no particular leaning in one direction or the other at this point.

Parking Consolidation: Consolidate, But Separate From the DDA?

Collins then tentatively raised the issue of a general strategic direction – he indicated he was almost hesitant to say it, because it probably wouldn’t come true. The notion of consolidating “the parking world” and then possibly moving that to a separate kind of authority “isn’t a crazy notion” from the DDA’s standpoint, he ventured. He allowed that this was probably a minority opinion on the DDA board at this point.

Smith offered the counterpoint that parking in itself was not the end – it’s a tool in the development toolbox. “Nobody comes downtown to park,” Smith noted, “they come downtown for other reasons.” Parking is something that can be leveraged and made part of a development strategy – she pointed to the fourth item on the term sheet.

Collins said that for the foreseeable future, unifying management and enforcement within the DDA made sense. He reiterated, though, that as a strategic direction – in terms of aligning Ann Arbor with the way that other cities do things – it was worth bearing in mind that it could be separate. Other cities, he said, had parking authorities that handle these kind of things – it would be a good thought experiment. Other cities had already solved these problems of what’s in and what’s out and who enforces what, he noted.

Parking Consolidation: City Council Approvals, Vetoes

Hewitt noted that there were a number of places where the Ann Arbor city council would want to have control in terms of ratification and veto power, as they have now with the parking rates. So he identified as a challenge to specify where the council had input on parking policy. He said he did not expect the city council to say, “Take the parking system and never come and darken our door again.”

On the other hand, Hewitt said, if the parking system were to be a very complex and dynamic system of the kind that transportation demand management calls for, he did not want to have every decision micromanaged by the city council, and he figured that the city council would also not want that. Where the line was drawn – residential permits, fines, rates – those were details that would have to be worked out and clarified.

Smith suggested that on an annual basis the DDA could do an update to the parking plan that it had submitted to the city council in April and make an annual presentation to the city council. It would not make sense, she said, to say to the city council, “On these five blocks we want to raise the rate, and on these five blocks we want to lower the rate.”

That’s why, Hewitt said, he would still like to have a joint working session with the city council to review the parking plan and the complexity of it.

In response to Hewitt, Taylor said he wanted to “push as much of this to staff as possible.” He suggested that the city staff create a chart of policy decision points by July 12 – the next joint meeting of the two committees. Teall noted that there would be city councilmembers who would want to have input on the policy issues, to which Taylor responded, “That is so deeply true.”

Taylor felt that the discussion would be best served, however, by having a pre-existing list to check through. The list/chart would include, for example, all the points of entry into the public parking system, meter location inside and outside the DDA, loading zones, residential parking, fees, fines – what are the city council’s veto, ratification and initiation roles for each of those?

At the mention of rates, Hewitt noted that under a transportation demand management strategy, the rates would be highly variable depending on the time of day and the location. The rates would also vary depending on demand. It would be difficult to express that as something the council could approve or disapprove. To that Taylor suggested that you would use a range of rates – you can charge “up to X.” Teall stressed that she just wanted the rate to be clear.

Hohnke brought the conversation back to the day’s agenda, after the group had drilled down fairly deep into the issue of parking.

Collins said that they needed a significant representative from the city’s and the DDA’s administration at the meetings. Teall asked if there were legal question about what the city council could and could not have veto power over. Collins said he didn’t know that they needed an attorney to sit at the meetings. The legal matters had to get vetted out eventually, and having attorneys present would simply make the meetings longer, he feared. Teall countered that it would be important to get legal advice quickly when a question came up.

Parking Consolidation: But Wait – Separation of Parking From Code Enforcement?

The committee discussion took an arc that included the third term sheet item – services in the DDA area – before Hohnke again brought the conversation back to a substantive issue related to separating parking enforcement from code enforcement.

Based on Hohnke’s query, the conversation circled back around to whether the DDA was interested in code enforcement. Hewitt reiterated that the DDA was concerned that it would wind up being responsible for enforcing codes that it had no input on – it should be eliminated from future discussion.

Taylor observed that the same problem could occur with respect to parking, in view of the city council’s veto power, but said that it was a smaller point. Collins called it a matter of scale. The only reason code enforcement had originally been included as a possible DDA responsibility was that community standards officers essentially enforce the parking, so there was a thought that an efficiency could be gained by consolidating that function.

But Collins said it was complicated by matters of law and politics. It was logical to do from a work-flow dynamic, but not for the public. Teall asked if community standards officers performed code enforcement work inside and outside the DDA district, would they be only looking for code violations and ignore parking violations? Hewitt pointed out that code enforcement throughout the city would be complaint-driven. They only enforce if someone complains. At that point Smith suggested that level of detail would require staff input.

Collins said it didn’t make a lot of sense to take an officer with the responsibility of doing a variety of enforcement and then to exclude certain geographic areas. Taylor suggested that the language of the term sheet adequately addressed the issue by stipulating “primary, but non-exclusive, responsibility.” Collins said that if a community standards officer was downtown in response to a sign problem and noticed a car parked in a no-parking zone, then of course they would write a ticket for that.

Collins allowed that some DDA members would disagree with that kind of scenario. But he said that he thought if someone is told “don’t worry about that area, someone else is doing the work” then it would not get done. Smith noted that she thought there was a difference between parking in a no-parking zone – that’s an illegal act – versus an expired meter, which is a just a ticketable offense, she said. There was a difference between someone who has chosen to park in an illegal spot versus someone whose meter expired, she contended.

Hewitt also raised the question of where the revenue from various citations would go.

Hohnke indicated a desire to have staff input on the question of whether there was any economy of scale and the potential for mutual benefit by having one group of people responsible for parking enforcement and code enforcement. It would be nice, he said, to have staff verify that separating the two kinds of enforcement is not a financial stumbling block.

Taylor noted that it was clear that the DDA board was not interested in taking on code enforcement. He said that at least some councilmembers had also expressed concern about it. Asking staff if separating the two would cause difficulty would be a good idea, said Taylor. The question to staff should be along the lines of: Right now it looks like we’re going to separate these two – tell us if we should change our minds.

Provision of Services in DDA Area

The third item on the term sheet was the possibility that the DDA would provide various maintenance type services in the downtown area.

Services: Enhancement, Calculation of Cost Savings

Hewitt moved the conversation to the topic of the DDA providing some types of services in the DDA district currently done “occasionally” by the city – in the area of trees and parks.

Smith gave a somewhat more complex representation of the DDA view on services. First, she said, there was a question of whether it was an enhancement of what was supposed to be done. The second issue, she said, related to possible cost savings. If the DDA hired a company to do all the tree trimming, that would have a cost to the DDA, but the cost saved by the city would be different. The city’s crew already existed, she said. So the DDA would not be able to write off the full cost of the tree trimming in any arrangement under the general context of the parking contract.

Collins said there was a two-edged sword with respect to downtown areas and taxation. Yes, he said, we want to have a nice downtown so that people will want to go there. But there was also a view among some DDA board members that downtown was being bled financially for the benefit of the wider city. That was not true, Collins said, but some people had the idea that if the DDA takes responsibility for doing some things downtown, it freed up other money so that leaf collection could happen in Ann Arbor Hills. Collins said he knew that it was not true, but observed that this was the “folk logic” to it.

Smith raised the issue of scale – she’d just visited Austin, Texas, and talked to the director of the downtown development authority there. Based on that conversation, Smith said that 90% of the taxes generated in the Austin district are used throughout the rest of the city, due to the high density. In that case, the amount of taxes generated in a small area suggested that it needed to be disbursed. It was a real question, she said, of how much money generated in the DDA district needed to stay inside the district.

Hohnke asked Hewitt what the level of support on the DDA board was in exploring service levels. Hewitt indicated that there was, in fact, interest in pursuing that as part of the parking contract. There was some discussion about how current the data was that had been included in the chart accompanying the term sheet.

Services: Private Support for Parks

The idea that private companies might adopt certain areas, like parks, in the downtown was not discussed at the committee meeting on Monday.

However, following up on some information from an audience member at the meeting, The Chronicle spoke by phone with John Teeter of First Martin Corp. about First Martin’s current supplement of maintenance in two Ann Arbor parks – Wheeler Park just north of the DDA district, and Liberty Plaza at the corner of Division & Liberty, located squarely in the DDA district.

According to Teeter, First Martin paid for the tree trimming at Wheeler Park this year and is handling the mowing, trimming and edging through this year’s mowing season. They’ve also repaired the steel fence around the playground area. In Liberty Plaza there’s no area to be mowed, but First Martin will be taking care of the tree trimming as soon as the holiday lights are taken down. In addition, the trash collection in the plaza has been added to a First Martin employee’s task list.

The two parks are not accidental choices of First Martin as locations where the real estate company thought about helping to supplement city services. Wheeler Park is located directly across from First Martin offices on Depot Street. And Liberty Plaza adjoins a First Martin property – the Michigan Square Building at 330 E. Liberty. The plaza was built at the same time as the building. First Martin takes an interest in neighborhoods where they operate, Teeter said.

DDA Does Development

Collins described support for parking enforcement by the DDA as strong, but complicated by legal issues, so support wasn’t 100% from the DDA board. Provision of services also had strong support, said Collins, but was work-flow complicated, so also not at 100%.

On the other hand, said Collins, support for the idea of the DDA assuming a leadership role in downtown development might have 100% support from the board. You could make a business case for the parking enforcement, because there are dollars in and dollars out. For services, that was more difficult, there were no dollars in per se, Collins said.

Development: Blueprint for DDA’s Role

Teall asked what staff should be asked for in terms of evaluating development. Hohnke said there was currently a work flow associated with development involving planning staff. He suggested it would be important to look at what currently happens and what a more DDA-driven work flow would look like.

Hewitt characterized current development as “reactive” on the part of city staff. The city council might say that it would like to see a particular lot developed, and staff then reacts to that. A DDA approach would be to look at all the lots in the DDA area and come up with a master plan for those – how they should be used and developed, with timelines.

Hewitt allowed that everything would have to be approved by the council, but it would be a more proactive, comprehensive approach than a one-at-a-time reaction. Smith said she didn’t think it belonged in the parking agreement – it should be a resolution from the city council directing the DDA to create a master plan for “divestment” of the city-owned parking lots over the long term. That would mean gathering input from consultants and the community and presenting it to the city council. Taylor objected to the term “divesting,” saying he’d prefer “optimizing.”

Collins indicated that the reason there was strong DDA support for this fourth point on the term sheet was that it was viewed as the core of the DDA’s mission, so everyone could agree with it. Developing for the benefit of the community was the core of what the DDA was about – parking, trees, community standards were part of the equation, but the development of the downtown was the real core of the DDA mission.

Smith said she didn’t think the city had a great track record recently, and concurred with Hewitt’s characterization of the approach as “reactive.” Hewitt said that with a one-project-at-a-time approach it was hard to maintain expertise among city staff. It was a matter of trying to fit it into people’s responsibilities who had other things to do.

Taylor asked if the Aug. 9 meeting of the committees would be a useful target date for a DDA proposal on how it should work – something fairly detailed. There would need to be appropriate points of city council check-in for the process. Smith noted that the DDA board did not typically meet in August and Hewitt said he’d need to check with staff – the DDA had just recently had its staff develop a parking plan on four months notice. So he wanted to at least consult with DDA staff before pledging them to a certain timeline.

Taylor suggested that at least among the committee members they would hope for a fairly detailed proposed by the Sept. 13 meeting for how the DDA would run development.

Development: Ann Arbor as a Suburban Community

At the most recent DDA board meeting, Russ Collins expressed a lament that what a lot of people wanted was acres and acres of parking, and that in general people did not necessarily support the idea of a downtown. He continued with that theme at a couple of points during Monday morning’s committee meeting.

I think that collectively we need to figure out how to deal with this – I’ve said this before so this is not new – but Ann Arbor is bottom line a suburban community where people pull up in their driveways at their house on a lot. So the vast majority of the electorate, of the population, doesn’t relate viscerally to what a downtown is. So consequently, it’s very easy for the NIMBY nature of communities and neighborhoods … to be encouraged to oppose things that are logical and appropriate for a downtown, but are more nuanced, or complicated or even inappropriate in a suburban kind of environment.

Collins said that accounted for the resistance on the part of citizens and the government alike to those things that the downtown needed in order to be vital. There was too much focus on parking as a problem – either as something there was under- or over-capacity for. Parking is something that suburban people worry about, said Collins, it’s not what urban people worry about.

There was a similar over-focus on parks, he continued. In a suburban setting, parks are 100% positive, he said – in an urban setting it’s more complicated and nuanced. When you say, “Parks” and 95% of your voters are suburban people, they go “Yes!” when that could really be a bad idea for a downtown, he said.

Overcoming the complicated dynamic of the electorate and politicians who have to respond to that electorate, said Collins, is going to be critical.

Development: The Politics of Downtown

Hewitt noted that less than 3% of Ann Arbor residents live in the DDA district. If that were 20%, he said, there would be an entirely different political dynamic going on. On that scenario, Hewitt continued, there would be a constituency that viewed the downtown as a downtown that would have political influence. With the current numbers, it was too small a group and it was divided among all the wards.

The shaded areas are Ann Arbor's five wards with the DDA district in red outline. The roughly pie-shaped configuration of the wards is specified in the city charter. (Image links to higher resolution file.)

Teall agreed with Hewitt, noting that each ward only had a slice of the downtown. Hewitt continued with the theme by saying there was no constituency that votes in numbers, with enough influence and a stake in downtown. It’s not that people don’t go downtown, he said, it’s just that “They love it in the wrong way.”

Taylor began his response to Collins and Hewitt by saying, “Without agreeing with a good deal of that …” He acknowledged that residents appeared before the city council and expressed opinions about developments. It struck him, however, that there is a strong consensus about density in the non-South-University area of the DDA district.

Development: How Tall Is Tall?

Collins contended that the only way to have a significant impact on density was to put up 20-30 story buildings – because that’s when you get the real estate efficiency and payback. But the citizenry at large, he said, would go “Whoah! Anything more than five stories makes me nervous!”

Taylor pointed to Zaragon Place 2 as an example of a project that enjoyed support. Hewitt allowed that Zaragon Place 2, at 14 stories, did not seem to be getting a lot of opposition at this point – it had not gotten high on the public’s consciousness, yet. The possible acceptance of Zaragon Place 2, he thought, suggested a slow transition was taking place. [The development, proposed for the southeast corner of William and Thompson, received approval from the city's planning commission on Tuesday.]

Hewitt noted that at First & Washington, a project had failed to get support 10 years ago because it was going to be seven stories instead of six stories. So 14 stories in the core of downtown was starting to become acceptable, Hewitt said. But 20 stories probably isn’t acceptable at this point, he said.

In response to an indication from Hohnke that he wanted to get the discussion back to the specific agenda of the DDA assuming responsibility for development, Taylor characterized the discussion to that point as acknowledging the challenges of putting together a proposal by Sept. 13.

Hewitt suggested that the DDA draft something and put it out there – the DDA was aware as well or better than anyone of the opposition. Smith suggested that the DDA board’s partnerships committee would be a good venue to discuss the issue – there was representation from the city council there, as well as the city planning commission, via the council’s representative to the planning commission, Tony Derezinski.

Collins said that from an emotional point of view, he was “about to give up and just say, screw it, bulldoze the downtown.” Everybody loves it to death, he said, and let’s just turn everything into a “strip mall karma,” so that when you’re outside of downtown you have one-story strip malls, and when you’re inside the downtown you have five-story strip malls. People want acres of parking everywhere, he said. “It takes a helluva lot of backbone to not cave in to that,” he concluded.

Hohnke allowed that it was a fair point, but he did not think it was exactly accurate. He then ticked through a list of approved developments:

• 8 stories at First & Washington [Village Green's City Apartments]
• 8 stories at Washington & Ashley [Tierra on Ashley]
• 10 stories at Kingsley & Ashley [Kingsley Lane]
• 5 stories on North Main [Near North]
• 10 stories of development at the Greek Orthodox church [The Gallery]
• 10 stories at Washington & Division [Metro 202]
• 14 stories at S. Forest [601 S. Forest]
• 14 stories at William & Thompson [Zaragon Place 2]

Hohnke concluded that the notion that there isn’t forward movement with development downtown is factually inaccurate.

Collins came back to the complicated nature of the discussions. Any building above five stories and below 20 stories, he said, is inherently inefficient, because above five stories you have to build a skyscraper in terms of the building code. And if you’re going to build that complicated a building, you need to build to 20 stories to get the payback you need to accommodate that.

Collins compared a 10-story building to a car with only two wheels. That was only halfway to where the city needs to go to get the financial incentives that would create density and development. Teall added that the greater height would also allow residential units to be affordable.

Development: City Council Would Retain Approval Power

Smith came back to idea that the DDA would just be creating a blueprint and it would remain 100% within the city council purview to execute the plan. Teall cautioned that she thought the DDA was to execute the plan as well. But Smith stressed that the city would not simply be turning the deeds to properties over to the DDA. And final approval of anything would rest on council, she said.

Taking Kline’s Lot – on Ashley between William and Liberty – as an example, Smith said the DDA could develop a plan, it would be presented to the city council and the council would either say, “You’re crazy!” or “Go for it!”

Teall said she wanted the city administrator, Roger Fraser, to be part of the development of the plan – she felt he had a good feel for the big development picture right now. People came to Fraser to ask about development, she said. Collins said that one of the things he and Teall had talked through with Fraser a few months ago was the idea of an “ombudsman for development” – someone to be an advocate for the developers within the city. Collins noted that obviously the ombudsman would not be able to circumvent the law or the process.

Smith mentioned that in Chicago they’d created a policy whereby green buildings went to the top of the processing pile.

Additional Ideas: Village Green, Bonding, Fees

At the DDA’s May 28 retreat, board member Newcombe Clark had raised a collection of points with hopes of getting some contractual consideration in connection with the $2 million payment the DDA had already agreed to make to the city.

Village Green

Those points included creating a deadline for Village Green, the developer of the City Apartments project at First & Washington, to exercise its option to purchase the land. The city council will vote at its June 21 meeting on extending that option.

At Monday’s meeting, Smith characterized the Village Green City Apartments issue as more of “an FYI” because it was coming before the city council for a possible extension of the deadline.

Hewitt said that from a budgeting point of view, the DDA was reserving a significant chunk of cash and bonding authority to finance the project and it was important to have some clarity.

Bond issuance, Smith said, was a valid point to raise, related to fees that the DDA pays to the city on major projects. Hewitt described the situation with the underground parking garage as paying for the privilege of paying for bonds for a structure that the DDA was giving to the city. “I think you can probably imagine,” Hewitt told the councilmembers present, “that it does grate somewhat.”

Downtown Policing

Clark has also pushed the idea of contracting for downtown police patrols – or some other means of getting “eyes on the street” as part of the possible parking contract discussions.

At Monday’s meeting, Hewitt said that having contracted for downtown beat patrol officers for State Street back in the mid ’90s, he had some clear ideas of how it should be handled. He said the DDA board was not yet ready to determine what their approach would be.

Smith stressed that it was important to inquire of the city staff what the capacity was for community standards officers to provide “eyes on the street.” Can they ask panhandlers to move on? What’s possible and what are the efficiencies? Chief Barnett Jones or the deputy chief will be addressing the DDA board’s partnerships committee next month on safety issues. Collins noted that he’d been reading “Freakonomics” recently, which includes a range of examples illustrating the difference between perception and reality.

The results of the safety survey had come back not as bad she thought they might, reported Teall – the results had been discussed at the last partnerships committee meeting. Hewitt noted there were only three reported crimes in parking structures in 2009 – it was his favorite statistic. Collins addressed the 84% statistic of those who felt the city was safe – what he didn’t know is if 16% considering it unsafe was too high.

Recap

Smith moved the group to wrapping things up and the next two main steps identified were: (i) to ask the staff of both the DDA and the city to identify the key policy decision points for parking enforcement, and (ii) to share with DDA staff the goals of putting together a proposal for the DDA’s role in developing city-owned surface parking lots.

As part of the concluding discussion, Collins noted that it was important to be mindful that using words like “development” already caused a lot of anxiety. He characterized it as a leadership issue – you lead people to what is beneficial without obfuscating. Teall agreed that it was important not to use trigger words.