Map of parking lots at Fuller Park that are leased to the University of Michigan.

The existing lease expires on Aug. 31, 2014. The three lots are: (1) the parking lot south of Fuller Road, next to the railroad tracks (Lot A); (2) the paved parking lot north of Fuller Road at Fuller Park (Lot B); and (3) the unpaved parking lot north of Fuller Road at Fuller Park (Lot C). The lots are used by UM during restricted hours.

According to a staff memo, the city has leased Lot A to UM since 1993. Lots B and C have been leased since 2009.

The proposal, which requires city council approval, is for a two-year lease with an additional two-year option for renewal. Annual revenue of this lease will be $78,665, and will be included as part of the parks & recreation general fund budget. [.pdf of proposed lease agreement] [.pdf of staff report]

The hours that UM can use these lots are stipulated in the agreement:

• Lot A: 4 a.m. to 4 p.m. Monday through Friday.
• Lot B (paved lot): 6 a.m. to 5 p.m. Monday through Friday, beginning the day after Labor Day through the Friday before Memorial Day, excluding holidays.
• Lot C (unpaved lot): 6 a.m. to 5 p.m. Monday through Friday, excluding holidays.

Three people spoke during public commentary regarding Fuller Park, though most of their focus was on the possibility of locating a train station at that site.

Responding to concerns raised during public commentary, commissioners discussed and ultimately amended the recommendation, adding a whereas clause that stated the “resolution does not commit PAC to support or oppose the use of Lot A as a rail station.”

PAC’s recommendation was unanimous and will be forwarded to the city council for consideration.

This brief was filed from the council chambers at city hall, 301 E. Huron, where PAC holds its meetings. A more detailed report will follow.

Yousef Rabhi (D-District 8), chair of the Washtenaw County board of commissioners. (Photos by the writer.)

At their Nov. 20 meeting, commissioners made several amendments, but did not substantively change the originally proposed budget submitted by county administrator Verna McDaniel in early October. Initial approval had been given during a six-hour meeting on Nov. 6, 2013. The Nov. 20 meeting lasted about two-and-a-half hours.

The vote was 7-1, with dissent from Ronnie Peterson (D-District 6) – though he cited three elements of the budget that he wanted to support: the community impact statements, outside agency funding, and position modifications. Rolland Sizemore Jr. (D-District 5) was absent. Dan Smith (R-District 2), who had dissented in the initial vote on Nov. 6, stated that he still had several concerns with the budget, but he voted for it because the budget supported many important activities throughout the county. He noted that although it spanned four years, the board is required by state law to approve the budget each year, so “technically it’s a one-year budget.”

Several new amendments were made during deliberations on Nov. 20. An amendment proposed by Conan Smith (D-District 9) directs the administration to conduct a study of county staff “to assess the capabilities of the organization to meet the community outcomes and processes.” Another amendment directs the administration to conduct a “citizens experience study” that would help inform board priorities.

Alicia Ping (R-District 3) proposed an amendment to shift $500,000 from the facilities, operations & maintenance fund to a contingency fund for parking. That contingency fund will serve as a placeholder as the county renegotiates parking contracts with the Ann Arbor Downtown Development Authority. The current contract, signed in 2004, runs through 2023.

As he has on previous occasions, Peterson argued against the four-year budget approach, preferring to maintain the current two-year budget process. He said that if he’s re-elected in 2014, he’ll fight to overturn the four-year budget and institute a one- or two-year budget instead. The board’s leadership – including Rabhi and Felicia Brabec (D-District 4), chair of the board’s ways & means committee – believe a four-year budget will improve long-term planning and stability, and could be transformational to the way that the county does business.

The board leadership also wants the board to be engaged in a continual process of monitoring the outcomes related to budget investments. To that end, on Nov. 20 the board also voted to adopt a set of “community outcomes” to guide that investment, as well as a framework for developing future budgets that reflect those desired outcomes. [.pdf of community outcomes resolution] Those outcomes are more detailed “impact statements” tied to budget priorities that the board approved on July 24, 2013.

A major discussion point at the Nov. 6 meeting – about the impact of budget cuts on the sheriff’s office – received much less attention on Nov. 20. However, after the meeting Rabhi told The Chronicle that discussions are underway with the sheriff, and that there will be a budget amendment brought forward soon that will address some of the concerns that have been raised by sheriff Jerry Clayton.

In addition to the budget, the board handled two items related to workforce development: (1) giving initial approval to accept $1,154,683 in funding from the Partnership Accountability Training Hope (PATH) program, which is part of Michigan’s welfare system; and (2) approving amended bylaws for the county’s workforce development board.

During public commentary, Christina Lirones advocated for the board to opt out of Pittsfield Township’s State Street corridor improvement authority (CIA). On Nov. 6, commissioners had voted to approve a tax-sharing agreement with Pittsfield Township and the CIA, which means that a portion of county taxes will be used to help fund the project. Lirones noted that there’s still time for the board to change its mind – as the board has one more meeting, on Dec. 4,

The board made one appointment on Nov. 20, adding York Township supervisor John Stanowski to an exploratory subcommittee for the future of the Washtenaw County road commission. Rabhi also indicated that nominations to other volunteer boards, committees and commissions would be brought forward for a board vote on Dec. 4. Though the deadline for submitting applications had passed, the deadlines have been extended until Dec. 1 for openings on three groups: the southeast Michigan’s Regional Transit Authority (RTA); the Washtenaw County historic district commission; and the Washtenaw County food policy council. More information about these positions is posted on the county’s website.

At the end of the meeting, Rabhi reminded commissioners that a holiday reception will be held prior to the board’s next meeting on Dec. 4, in the lobby of the county administration building at 220 N. Main from 4-6 p.m.

2014-17 County Budget

Initial approval for the four-year Washtenaw County general fund budget – from 2014-2017 – had been given on Nov. 6, 2013 after considerable debate. State law mandates that the budget for the following year must be approved by the end of the current year, on Dec. 31. Nov. 20 was the penultimate board meeting scheduled this year, with the final session falling on Dec. 4.

The $103,005,127 budget for 2014 – which represents a slight decrease from the 2013 expenditures of $103,218,903 – does not call for layoffs. However, the budget includes putting a net total of 8.47 full-time-equivalent jobs on “hold vacant” status, as well as the net reduction of a 0.3 FTE position. The recommended budgets for the following years are $103,977,306 in 2015, $105,052,579 in 2016, and $106,590,681 in 2017. The budgets are based on an estimated 1% annual increase in property tax revenues. [.pdf of original draft budget summary] [.pdf of draft budget summary revised as of Nov. 20, 2013]

Most of the 8.47 FTEs that are proposed to be kept unfilled are in the sheriff’s office. On Nov. 6, sheriff Jerry Clayton had addressed the board, telling commissioners that his office can’t continue to absorb budget cuts without affecting services. On Nov. 20 he did not formally speak to the board, though he was in the building.

In addition to the main budget resolution, also on the Nov. 20 agenda was a resolution adopting a set of “community outcomes” to guide budget investments, as well as a framework for developing future budgets that reflect those desired outcomes. [.pdf of community outcomes resolution] Those outcomes are more detailed “impact statements” tied to budget priorities that the board approved on July 24, 2013. The budget priorities are:

• Ensure a community safety net through health and human services, inclusive of public safety;
• Increase economic opportunity and workforce development;
• Ensure mobility and civic infrastructure for Washtenaw County residents;
• Reduce environmental impact;
• Internal labor force sustainability and effectiveness.

By way of example, the five community impact statements for the priority of “ensure a community safety net” are:

• Children in Washtenaw County will have access to care, support, and developmental tools they need to be ready to ensure success throughout graduation, college, or employment.
• Washtenaw County residents will have ready and affordable access to health care in order to achieve optimal health and increase life expectancy for all residents.
• Washtenaw County residents will have affordable and safe housing and transportation options.
• Washtenaw County residents will be food secure and have ample access to healthy foods that are locally sourced.
• Washtenaw County residents will be safe and secure at home and in their community.

The community outcomes resolution also set a timetable for 2014 to implement this new approach:

• Jan.-March 2014: Administration provides research on proven strategies that feed into identified community outcomes.
• April-June 2014: Departments identify current programs that feed into proven strategies.
• July-Sept. 2014: Administration identifies program investment levels, trends, and gaps, and maps these to strategies & outcomes.
• Oct.-Dec. 2014: Board reviews information to inform changes in 2015 budget re-affirmation.

One change between the budget document given initial approval on Nov. 6 and the version considered on Nov. 20 was the addition of a policy directive that summarizes the “community impact investing” approach. It directs the county administrator to bring a recommendation for implementation, including details on staffing and a budget, by Jan. 22, 2014 for board approval.

County administrator Verna McDaniel had initially presented the budget at the board’s Oct. 2, 2013 meeting. A public hearing was held on Oct. 15, 2013 but it was held after midnight and no one spoke. A second public hearing was held on Nov. 20, but no one spoke at that, either.

At the start of the meeting, Felicia Brabec (D-District 4) pointed out that the board had received a packet with answers to budget questions that various commissioners had asked. [.pdf of budget Q&A]

A budget amendment had been put forward on Nov. 6 by Dan Smith (R-District 2), with the board postponing action on it until Nov. 20. That amendment had proposed adjusting projections to increase revenues by $449,813 over the four-year period, and allocating $100,000 per year in additional funds to the sheriff’s office. At the beginning of the Nov. 20 discussion of the 2014-2017 budget, Smith withdrew the amendment.

2014-17 County Budget: Board Discussion – Community Outcomes

There were two separate resolutions that the board considered on Nov. 20 related to the budget: (1) approval of the community outcomes and a process for implementing this new “community impact investing” approach; and (2) final approval of the 2014-2017 general fund budget.

The first item that commissioners considered was the community outcomes resolution.

Ronnie Peterson (D-District 6).

Ronnie Peterson (D-District 6) asked a series of questions about the community outcomes and the revised budget document. Yousef Rabhi (D-District 8) said changes had been made to the budget document based on the board’s discussion on Nov. 6. [There were two changes in the budget document in the section on policy and directives. An item on "community impact investing" was added, and an item on the fund balance was revised to give direction on handling any surplus or deficit in the general fund.]

Peterson indicated that approval of the budget was the board’s primary responsibility, and he called a four-year budget “unheard of in any other community around the state and in the nation.” He expressed concern that the revised budget document hadn’t been made available sooner.

Regarding the “community outcomes” document and the revised budget document that now included a section on “community impact investing,” Peterson wondered if there was any indication about the amount of staff time and resources that would be required to implement this approach. He said he didn’t have a problem with the budget priorities themselves, but it wasn’t clear how those priorities would be carried out, or what line item in the budget was designated for this purpose. He said he’d like to see a timeframe for how the board could start addressing these priorities during the remainder of their term, which runs through 2014. Was any of this information in the budget document? he asked.

Felicia Brabec (D-District 4) replied, saying that the revisions added to the budget document on community impact investing had stemmed from the community outcomes resolution that was also on the Nov. 20 agenda. Other commissioners have raised similar questions about how these outcomes will be implemented, she said. The county administrator, Verna McDaniel, will be taking the lead on that. Brabec pointed to text in the revised budget document that outlined this approach:

The County Administrator will bring a planned recommendation to implement the Community Impacts process with appropriate staffing and budget at the first business meeting in 2014, January 22, for BOC approval.

Where will the funding come from to implement this process? Peterson asked again. The county already has a lot of obligations, he noted.

Rabhi responded to Petersen, saying that in the previous two-year budget approach, the first year would be spent developing the budget, but the second year would be focused on other things. The intention of the proposed four-year budget and community outcomes approach is to help keep the board involved in the budget as a “living document,” Rabhi said, and to have an active role in managing the budget as circumstances change.

Peterson said he wanted to be a team player, but he was totally uncomfortable with a four-year budget. That comment wasn’t aimed at the administration, he added – it’s aimed at the board. He wondered where the money would come from to hire someone who would implement the community impacts process. Peterson said he was glad that Rabhi had pointed this out, “because we don’t have agenda meetings, so we don’t have the appropriate meeting to discuss this.” “Neither do we have working sessions to discuss these important matters.” [It's not clear what Peterson was referring to, because the board does have regularly scheduled working sessions. The agenda briefings, which Peterson rarely attended, were cancelled because they were deemed ineffective. They occurred at the start of the working sessions, nearly two weeks prior to the board meetings. Many agenda items weren't set at that point.]

Peterson spoke about his intent to bring back the two-year budget approach. “Now I’m going to do all I can, if the voters return me back here … to overturn this [four-year budget], let me assure you,” Peterson said. He hoped other commissioners would help him do that.

Conan Smith (D-District 9) said he wanted to have this conversation, and it’s something commissioners should discuss. However, he added, it was not actually germane to the topic that’s in front of the board. The topic isn’t the allocation of resources, he said, it’s about the budget priorities and community outcomes. He wanted to talk about that, and then discuss the allocation of resources.

Alicia Ping (R-District 3) talks with Diane Heidt, the county’s human resources and labor relations director.

Peterson wondered how the board could vote on priorities and outcomes without knowing how they’d pay for the implementation. To adopt something, then say that they’ll worry about how to pay for it later, isn’t responsible, he said, and it shouldn’t be “buried” in the budget document.

Conan Smith replied that the community outcomes resolution doesn’t require any funding. It changes the work plan of certain staff members, directing the administrator to lead a “structured and transparent process,” he said, at the bare minimum. There might be costs eventually associated with implementation, Smith added, but probably not until 2015. Those costs would require board approval in 2014, he noted.

Alicia Ping (R-District 3) said Peterson had made some good points. But she wanted clarification: Was funding currently available to pay for these priorities, and did the proposed 2014-2017 budget already reflect those priorities? Or would the administration be required to redo the budget in the future, after the board adopts these priorities?

After some additional back-and-forth between Ping and Rabhi, county administrator Verna McDaniel weighed in. She indicated that many of the programs and services that are funded in the 2014-2017 budget already fit the board’s priorities. In 2014, the staff and board will look at county programs and services in relation to the community outcomes to see where there are gaps, she explained, and then to adjust investments in 2015 based on that. That same process will be repeated in future years.

Rabhi said there needs to be a process of developing strategies to reach the outcomes that the board wants. It’s a multi-year process, he noted, and it will involve engaging future boards as well. [That is, the composition of the board could change after the November 2014 elections.]

Brabec explained that the previous board and former board chair [Conan Smith] had started down this path, to try to take a more strategic approach to allocating funds. It’s a big shift in the way that the county has funded programs and services, she said, and it can’t happen overnight.

Peterson expressed concern that the board would be micromanaging the administration. He described the process as “blossoming before my eyes.” He characterized the budget process as rushed, and again stated that it was the most important thing that the board was charged with undertaking.

Rabhi noted that the budget document simply directs the administrator to come to the board with an implementation process, with a recommendation for staffing and a budget. The board can decide what it wants to do at that time, he said.

Brabec replied by pointing out that it’s actually been a lengthy budget process, starting with retreats in early 2013 as well as presentations and discussions throughout the year at working sessions and board meetings. She noted that she’d also talked with commissioners individually, and had tried to be systematic, thorough and inclusive.

Peterson indicated that he was the one who suggested, years ago, that the board should hold retreats. He asked when commissioners had discussed this community outcomes proposal – for the board to micromanage the administration – at a retreat. That discussion might have occurred at an “inner circle” meeting, he said, but “I’ve never been privileged to that kind of information.” He thought the board would need to deal with some “major hurdles” in 2014 and 2015, and he didn’t think he could support the budget. He said he’d support the community outcomes, because it didn’t allocate any funding to the process.

Outcome on community outcomes resolution: The resolution passed on a 7-1 vote, over dissent by Alicia Ping (R-District 3). Rolland Sizemore Jr. (D-District 5) was absent.

2014-17 County Budget: Board Discussion – Budget (Policy Amendment)

Conan Smith (D-District 9) said he wanted to build off the previous conversation on community outcomes, noting that Ronnie Peterson (D-District 6) had made a critical point.

Commissioners Conan Smith (D-District 9) and Felicia Brabec (D-District 4).

The county doesn’t know with certainty what its revenues will be from year to year, Smith said, so there needs to be a solid process in place to adjust to the reality of higher or lower revenues. The actual amount of revenues isn’t known until April or May, when the county’s equalization report is completed. In 2013, that report indicated that revenues would be about $2 million higher than projected, Smith noted.

He highlighted a section of the budget document related to policies, and stated that it didn’t quite accomplish what he wanted to see.

The section he referred to was as follows [strike-through was text deleted from the Nov. 6 version, and italics indicates text added after Nov. 6 and included in the Nov. 20 proposed document at the start of the meeting]:

11. The Board of Commissioners commits to long-term budget flexibility and sustainability, and an adequate level of cash flow with its attention to fund balance. A healthy fund balance is an essential ingredient and the following was considered to determine an appropriate level as a target: an appropriate level to fund at least 60 days of operations, to help offset negative cash flow (primarily from the seven month delay in property tax collections after incurred expenses), and to assist buffering any unexpected downturns. Therefore, the Board shall plan future budgets to meet the goal of a Reserve for Subsequent Years representing at least 20.0% of General Fund expenditures, net of indirect costs. To accomplish this any excess property tax revenue above projected budget (assumptions), but excluding the fiscal years that have structural salary increases tied to property tax revenue growth per labor agreements, as well as any year-end surplus of which 70% will be contributed to fund balance until the reserve goal is met and 30% to be determined by Board of Commissioner authorization. Any remaining excess surplus available will have options for use recommended by the County Administrator in alignment with the investment policy as outlined by the adopted Community Impact Resolution 13-TBD, presented to the Board of Commissioner for consideration and confirmed by Board action and authorization.

C. Smith advocated for a supplemental budget process so that the board can adjust the budget after the equalization report, depending on whether revenues are higher or lower than projected. After the equalization report is delivered, he thought that the administrator should take a month or two to develop a supplemental budget recommendation that aligns with the board’s priorities and community outcomes. The board can at that point debate the proposal, he said, and adopt it by June.

It was an important process, C. Smith said, and he wanted to pull it out as a separate policy within the document to reflect that process. Yousef Rabhi (D-District 8) suggested changing the adoption date until July, and Dan Smith (R-District 2) proposed substituting “community outcomes and processes” in place of “investment policy.” Both suggestions were accepted by C. Smith as friendly amendments.

The final proposed amendment was as follows, with changes to the original item and the new separate item added to the list of policies:

11. The Board of Commissioners commits to long-term budget flexibility and sustainability, and an adequate level of cash flow with its attention to fund balance. A healthy fund balance is an essential ingredient and the following was considered to determine an appropriate level as a target: an appropriate level to fund at least 60 days of operations, to help offset negative cash flow (primarily from the seven month delay in property tax collections after incurred expenses), and to assist buffering any unexpected downturns. Therefore, the Board shall plan future budgets to meet the goal of a Reserve for Subsequent Years representing at least 20.0% of General Fund expenditures, net of indirect costs.

12. Any annual surplus or deficit will have options for use recommended by the County Administrator in alignment with the community outcomes and processes as outlined by the adopted Community Impact Resolution 13-TBD, presented to the Board of Commissioner for consideration and confirmed by Board action and authorization in July of each calendar year.

Outcome on policy amendment: Commissioners approved the amendment unanimously.

2014-17 County Budget: Board Discussion – Budget (Staff Survey Amendment)

Conan Smith then proposed another amendment related to an issue he’d addressed at the Nov. 6 meeting, regarding a staff occupational capabilities survey that the county previously did every two years. It “provides pretty substantive intelligence on how our team is functioning as a team,” he said. It’s a management tool that was recommended by a budget task force focused on workforce development, which he led. His understanding was that the survey used previously by the county cost between $35,000 to $50,000, but there might be other options for a more cost-effective tool, he said.

He offered the following item as an amendment to add to the list of budget policies and directives:

35. The administrator is directed to prepare and implement a staff study or survey to assess the capabilities of the organization to meet the community outcomes and processes.

Andy LaBarre (D-District 7) wondered how this would bind the administrator in terms of the survey’s cost. C. Smith replied that he had left it intentionally broad to allow for flexibility of options. If it exceeds the administrator’s discretionary spending authority, then she would come to the board for authorization. [The county administrator is authorized to make expenditures up to $100,000 for contracts without board approval.]

Dan Smith (R-District 2) proposed striking the words “or survey” – it was taken as a friendly amendment.

Felicia Brabec (D-District 4) thanked C. Smith for his proposal, but questioned whether they could find a cost-effective tool that would be useful to achieve their goal.

Alicia Ping (R-District 3) wondered how often C. Smith wanted to do this, since there was no time period indicated in his proposal. C. Smith said he’d like to do it at least once, and noted that the county in the past did a survey every two years.

Yousef Rabhi (D-District 8) suggested keeping it open-ended, and allowing the administrator to settle on the frequency. Ping noted that if it’s in the four-year budget document without a time reference, it could be interpreted as something that should occur every year. She suggested adding a phrase stating it could be done a maximum of two times during the four years. C. Smith accepted that as a friendly amendment.

Ping also said it might make sense to survey constituents as well.

The final version of this amendment stated:

35. The administrator is directed to prepare and implement a staff study to assess the capabilities of the organization to meet the community outcomes and processes, to be conducted a maximum of two times during the four-year period.

Outcome: The amendment passed unanimously on a voice vote.

2014-17 County Budget: Board Discussion – Budget (Citizen Survey Amendment)

Following up on Alicia Ping’s comment regarding a survey of constituents, Conan Smith recalled that when Kristin Judge had served as a county commissioner representing Pittsfield Township, she had suggested surveying residents to see if the county’s programs and services reflected the priorities of the citizenry. At the time, he said, he wasn’t a big fan of the approach. But he also hadn’t been a big fan of the county’s OpenBook website, which Judge had championed. Yet OpenBook has been something that people really like, he noted, and it creates transparency and gives people confidence in what the county is doing.

C. Smith suggested conducting a survey to find out whether the county is tackling the issues that residents think are high priority. He offered the following amendment to add another directive to the budget document:

36. The county shall conduct a citizens experience study assessing customer interactions with county entities via our website and other means, to inform the development of community outcomes and board priorities.

Yousef Rabhi recalled talking with Judge about this idea in the past. He said he’s proud of the outreach that the county has done, including information on the county’s website and public meetings. This survey is a good way to continue that tradition, he said.

Outcome on citizen survey amendment: It passed unanimously on a voice vote.

2014-17 County Budget: Board Discussion – Budget (Parking Amendment)

Alicia Ping (R-District 3) proposed an amendment to remove $500,000 from Fund 6310 (facilities, operations & maintenance) and move it to a contingency fund for parking.

County administrator Verna McDaniel and Kent Martinez-Kratz (D-District 1).

Ping explained that $500,000 is approximately what the county pays the Ann Arbor Downtown Development Authority for parking “and a few other miscellaneous things.” She had asked for the contract that authorized the county to do this. The contract was found, but there’s no indication that the board ever passed a resolution authorizing the contract, she said. Before a new deal is made, Ping said she either wanted to find the previous resolution of approval, or bring forward a resolution to approve a new contract.

Yousef Rabhi (D-District 8) thanked Ping for bringing it forward, saying it’s been on his mind for quite some time, too. It’s a topic that deserves more discussion, as part of re-evaluating the county’s parking needs in downtown Ann Arbor, he said. Rabhi added that he’s talked to Greg Dill, the county’s director of infrastructure management, about doing a study of the county’s parking needs and assets, and then evaluating the parking expenditures based on that. The county would then need to look at any existing contracts, the length of those contracts and the legal issues that bear on moving forward with these discussions, Rabhi said.

Dill reported that the study is expected to be completed within the next 2-3 weeks.

Andy LaBarre (D-District 7) asked if anyone had been in touch with the DDA about this. County administrator Verna McDaniel indicated that the DDA is aware of this situation and she’s having ongoing discussions with DDA executive director Susan Pollay.

In response to a query from Conan Smith (D-District 9), Ping clarified that the intent is for no money to be expended for parking until the issue is sorted out.

Outcome: On a voice vote, the amendment was unanimously approved.

By way of additional background, the city of Ann Arbor contracts with the DDA to manage the city’s public parking system. The issue of parking payments to the DDA arose earlier this year, as the county administration worked to eliminate a projected $3.9 million budget deficit in 2014. County administrator Verna McDaniel and other senior staff met with DDA executive director Susan Pollay to propose the possibility of opening up a long-term parking agreement to renegotiate the amount that the county pays for monthly parking permits.

McDaniel told The Chronicle that instead, the DDA proposed offering a one-time $300,000 grant for renovations at the county Annex building at 110 N. Fourth Ave in downtown Ann Arbor. The county had already budgeted for those Annex renovations, as part of a broader strategic plan for its facilities.

The DDA board approved that $300,000 grant at its Sept. 4, 2013 meeting. Bob Guenzel, former Washtenaw County administrator, is a member of the DDA board. Guenzel was absent from the Sept. 4 meeting.

The current contract for parking took effect on Jan. 1, 2004 and runs through 2023. It updated a previous agreement from 1986 that had expired in November 2002. The original 1986 parking agreement between the city and the county had been signed by the mayor of Ann Arbor, Ed Pierce, and the chair of the county board, Meri Lou Murray. [.pdf of 1986 parking contract]

The 2004 parking deal was signed by mayor John Hieftje, but it was then-county administrator Bob Guenzel – not the chair of the county board – who signed on the county’s behalf. [.pdf of 2004 parking contract]

And although the Ann Arbor city council approved that parking deal with the county at its Jan. 5, 2004 meeting, it does not appear that the county board of commissioners directly approved the deal. The most recent county board resolution regarding the parking agreement dates back to 2000, when the board passed a resolution directing the county administrator to “negotiate and sign” a long-term parking agreement with the DDA. There was no resolution approving the subsequent contract. No current commissioners were on the board at that time. [.pdf of September 2000 board resolution]

The county board had passed a similar resolution in December 1998 that also directed the county administration to negotiate a new parking agreement with the DDA. [.pdf of December 1998 board resolution] Background provided in a staff memo that accompanied that December 1998 board resolution described the history of the county’s parking deal with the city:

On March 4, 1986, the City and the County executed an Agreement concerning the Ann-Ashley parking structure. Under the Agreement, the County donated a plot of land to the City, contributing to the parcel on which the parking structure was to be built. The Agreement also called for the City to reserve 250 parking spaces in the new structure for the County’s use. The County received a discount of $14.10 per space for these spaces in exchange for its donating the property to the City. The Agreement is for 15 years and commenced when the structure was opened on November 20, 1987. As such, this Agreement will expire on November 19, 2002.

On December 1, 1988, the City and County executed another parking Agreement. Under this Agreement, the County agreed to let the City use the County-owned property at the southwest corner of N. Main Street and Ann Street for a City-run parking lot. In exchange for the use of this land, the City provided the County another 49 parking spaces on the first or second floor of the Ann-Ashley parking structure at no cost. This Agreement was for 10 years and is now coming to an end.

The current deal, signed in the fall of 2004, gave the county a discounted rate for the first two years of the arrangement, but after that the county was required to pay the full market rate for 300 monthly permits in the Ann Ashley parking structure. An additional 15 permits are provided at no cost, for use by the Washtenaw Housing Alliance and employees of the Delonis Center homeless shelter.

2014-17 Budget: Board Discussion – Budget (Sheriff’s Office)

Ronnie Peterson asked about the sheriff’s budget. He noted that he represents two communities – Superior Township and Ypsilanti Township – who contract with the sheriff’s office for deputy patrols. It’s one of the few ways in which these townships directly ask for services from the county, he said. He wondered how those contractual arrangements would be handled within the context of the 2014-2017 budget. The contracts have an annual 1% increase in payments from the townships, he noted, but he wondered how the difference would be made up if expenses actually increase more than that. He wondered if there’d been any discussions with township leaders about the services that the county provides – such as deputy patrols, building inspections, animal control – and the possible impact of a four-year budget.

Washtenaw County sheriff Jerry Clayton.

Yousef Rabhi said he’s attended meetings of various entities like the “CEO Group” (a regular meeting of township supervisors), the Washtenaw Area Transportation Study (WATS), and others, and has reached out to them about the four-year budget.

County administrator Verna McDaniel said that the police services steering committee, which is led by sheriff Jerry Clayton and includes representatives of the entities that contract for deputy patrols, continues to meet. The current contracts for the Police Officers Association of Michigan union (POAM) expire at the end of 2014. The contracts for the Command Officers Association of Michigan union (COAM) expire at the end of 2015. McDaniel said the steering committee and contracting entities had agreed to 1% increases in the contracts for 2014 and 2015, and will be working to resolve issues for new contracts in 2016 and 2017.

Peterson noted that no commissioner can guarantee that the budget will be modified in the next four years. He asked again whether the officials of townships that contract for services are aware of the impact of a four-year budget. McDaniel said that township officials are aware, and that she’s also on the agenda for the CEO Group to talk about the four-year budget. Peterson expressed skepticism that township officials had been adequately apprised of the impact, such as inflationary costs that might need to be absorbed in new contracts.

Outcome: There was no amendment proposed on this issue.

Sheriff Jerry Clayton had spoken to commissioners at their Nov. 6, 2013 meeting to express his concerns about proposed budget cuts to the sheriff’s department. He said his office can’t continue to absorb budget cuts without affecting services. On Nov. 20 he did not formally speak to the board, though he was in the building.

After the Nov. 20 meeting, board chair Yousef Rabhi (D-District 8) told The Chronicle that discussions are underway with the sheriff, and that there will be a budget amendment brought forward – possibly on Dec. 4, but more likely in early 2014 – that will address some of the concerns raised by Clayton.

2014-17 Budget: Board Discussion – Budget (Final Comments)

Ronnie Peterson said he’d be voting no, based in part on the uncertainty of revenues each year. He was also very concerned about how the county will handle its pension and retiree health care obligations, and about the repeal of the state’s personal property tax, which takes effect next year. He cited several other concerns, including contractual arrangements with communities within the county, and the impact of labor negotiations with employees in the sheriff’s office.

Dan Smith (R-District 2).

Dan Smith described the board priorities as troubling, saying he wasn’t satisfied with them. At the same time, the budget funds numerous important activities throughout the county, he said. He said he shared many of Peterson’s concerns about a four-year budget. Having additional board involvement will be a cultural change from the “set it and forget it” culture of the previous two-year budget cycle, he noted. He’s interested in seeing how that involvement takes shape. “Words like ‘living document’ concern me,” he said, because it defeats the purpose of having a budget. However, technically this isn’t a four-year budget, he said: It’s really only a one -year budget, because state law mandates that the county pass a budget every year.

Smith also said he continues to be concerned about the “very questionable” tax levies totaling about $1.5 million annually. [The reference was to levies that the board made without voter approval for economic development/agriculture (Act 88) and indigent veteran services.]

Outcome on main budget resolution: The budget passed on a 7-1 vote, with dissent from Ronnie Peterson (D-District 6) – though he cited three elements of the budget that he wanted to support: the community impact statements, outside agency funding, and position modifications. Rolland Sizemore Jr. (D-District 5) was absent.

After the vote, Yousef Rabhi thanked the board for their work, and in particular Felicia Brabec, who took the lead in developing the community outcomes and priorities. He thanked Ronnie Peterson for his comments during deliberations. “Though we voted differently tonight, I want to say that I really respect the place that he’s coming from.” He also thanked Dan Smith, saying that they didn’t see eye-to-eye on everything, but he appreciated Smith’s work. Rabhi indicated that he looked forward to continuing the budget process. He also thanked the staff for their work, as well as members of the press for reporting on the process, and the public for their input.

Rabhi called the budget transformational, saying he hoped it set the stage for other communities. He said he’s talked to someone who works at another county in southeast Michigan, who told him that county officials were using Washtenaw County’s budget process and board priorities as a template for their board. “The idea is spreading – of doing community impact investing,” Rabhi said.

Workforce Development

Two items related to workforce development were on the Nov. 20 agenda.

From left: Mary Jo Callan, director of the county’s office of community & economic development, and commissioner Alicia Ping (R-District 3).

The board was asked to give initial approval to accept $1,154,683 in funding from the Partnership Accountability Training Hope (PATH) program, which is part of Michigan’s welfare system. The funding is for the period from Oct. 1, 2013 through Sept. 30, 2014.

The money, to be administered by the county’s office of community and economic development, is meant to help fund training and “job readiness” services to welfare applicants or recipients who are low-wage workers. [.pdf of staff memo describing PATH services] The funding is $5,520 less than the county received last year.

Commissioners also were asked to approve bylaws for the county’s workforce development board (WDB). [.pdf of adopted bylaws] The bylaws had already been adopted by the workforce development board at its meeting on Sept. 5, 2013.

A staff memo outlined reasons for the changes:

One major factor was a recent change in State policy that impacted the language in the bylaws, particularly with respect to WDB representation that altered the composition and the sectors represented on the WDB. Other changes to the WDB bylaws include changes to the committees and officers of the WDB; the minimum number of official meetings required during a calendar year; and the addition of language related to employer “demand driven” system.

Outcome: Without discussion, commissioners unanimously approved both workforce development items.

Road Commission

In an item added to the agenda during the meeting, the board was asked to approve the appointment of York Township supervisor John Stanowski to an exploratory subcommittee for the future of the Washtenaw County road commission.

At their Oct. 2, 2013 meeting, commissioners had created a new seven-member subcommittee to “explore partnerships and organizational interactions with the Washtenaw County Road Commission.” Members appointed at that time included four county commissioners – Alicia Ping (R-District 3), Conan Smith (D-District 9), Dan Smith (R-District 2) and Rolland Sizemore Jr. (D-District 5) – and three township supervisors: Mandy Grewal of Pittsfield Township, Ken Schwartz of Superior Township and Pat Kelly of Dexter Township. The Oct. 2 resolution stated that the subcommittee would be chaired by the county board’s vice chair. That position is currently held by Ping.

Also on Oct. 2, the board had approved an amendment to that resolution – proposed by Conan Smith – to give the subcommittee a $10,000 budget for possible research or travel costs to bring in experts on the issue. The action came late in the evening, over objections from Andy LaBarre (D-District 7), who said it “doesn’t look good and isn’t needed.” The final vote on the overall resolution, as amended, passed over dissent from LaBarre and Kent Martinez-Kratz (D-District 1).

In the past, county commissioners have discussed the possibility of expanding the three-member road commission, in part because of how its small size causes potential for violating the state’s Open Meetings Act. And some commissioners would like to explore possibly consolidating the road commission with overall county operations.

Currently, the road commission is a semi-autonomous entity that oversees the maintenance of about 1,650 miles of roads in the county that are outside of cities and villages, including about 770 miles of gravel roads. Road commissioners are appointed by the county board of commissioners, but decisions made by the road commission do not require authorization by the elected county board of commissioners.

Current road commissioners are Doug Fuller, Barb Fuller – who was appointed on Oct. 16, 2013 – and Fred Veigel, who also is a member of the county’s parks & recreation commission. The salary for road commissioners, which is set by the county board, is $10,500 annually.

Outcome: Commissioners approved the appointment of John Stanowski to the road commission exploratory subcommittee, without discussion.

Also on Nov. 20, Ping reported to the board that the subcommittee has held its first meeting and is planning a second one on Dec. 4. That meeting starts at 5:30 p.m. in the administrative conference room at 220 N. Main St. in Ann Arbor. The initial discussion had gone well, Ping said, and she hopes the group will return with recommendations in March of 2014.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: December Tax Bills

Alicia Ping (R-District 3) said she’d recently been contacted by the treasurer of Lodi Township [Michelle Foley], who had raised concerns about the timing of the county board’s approval of the Act 88 millage. [The board gave final approval to an increase in the levy of the economic development and agricultural tax, known as Act 88 of 1913, at its Nov. 6, 2013 meeting. The increase, which will be levied on the December 2013 tax bills, is from 0.06 mills to 0.07 mills. The county's position is that because Act 88 pre-dates the state's Headlee amendment, it can be levied without voter approval. The county also levies a tax for indigent veterans services in this same way.]

The board action took place more than 45 days after the treasurers of local municipalities must file with Washtenaw County to have their tax bills printed, Ping said, adding that she hadn’t been aware of this situation. If the board decides to levy the millage again next year, commissioners should consider acting on it earlier in the year so that there’s plenty of time to prepare the tax bills with that information.

Communications & Commentary: Pittsfield Twp. State Street CIA

Christina Lirones spoke during both opportunities for public commentary, and both times addressed the topic of Pittsfield Township’s State Street corridor improvement authority (CIA). She reminded commissioners that she’d spoken to them at their Nov. 6, 2013 meeting, and she again urged them to opt out of the CIA. There’s still time to make that decision, she noted, because the 60-day window to opt out ends on Dec. 9. The county board’s final meeting of the year is on Dec. 4.

Commissioner Ronnie Peterson (D-District 6) talks with Pittsfield Township resident Christina Lirones, who spoke during public commentary urging commissioners to opt out of the township’s State Street corridor improvement authority.

[On Nov. 6, commissioners had voted to approve a tax-sharing agreement with Pittsfield Township and the CIA, which means they intend to participate in the project. Dan Smith (R-District 2) had proposed an opt-out resolution at the board's Oct. 16, 2013 meeting, but it failed on a 2-7 vote, with support only from D. Smith and Conan Smith (D-District 9).]

Lirones said that no residents who live on South State have been invited to serve on the CIA board. In fact, she said, those residents have been spurned. The township board recently appointed a resident at large – county commissioner Felicia Brabec (D-District 4). Although Brabec is a Pittsfield Township resident, she doesn’t live in the State Street corridor, Lirones said. The residents of that corridor are very opposed to the project, she added, but haven’t been invited to participate.

The project is unnecessary, Lirones said, because developers are willing to pay for improvements if there’s the political will to negotiate with them. She pointed out that the road is already three lanes in most places, and is five lanes in some areas. The intersection at Textile and State is still being paid for through a special assessment, she noted, with widened lanes and a traffic signal. There are also signals at the intersections of Morgan and Avis Drive, which were paid for by businesses.

The area is already being developed, Lirones said, so it makes no sense to capture taxes to encourage development – it’s already happening. She noted that the township is characterizing the residential property in that corridor as undeveloped. The taxes should be going into the coffers of the taxing authorities, including Washtenaw County. She noted that some other taxing authorities are opting out, and she said that Pittsfield Township residents that she’s talked with also don’t want it. She didn’t think county commissioners should commit $3.8 million from the general fund and $600,000 from the parks & recreation millage [over a 20-year period] to a project “that’s completely unnecessary.”

Later in the evening, Lirones spoke again during public commentary on the same topic. She noted that if the taxing authorities opt out, all of the land along the South State corridor will be developed and the taxing authorities will keep 100% of their taxes. If they don’t opt out, the corridor will still be developed, but taxing authorities will only get 50% of the incremental tax increases resulting from that development. “So there’s absolutely no advantage to … not opting out,” she concluded. She noted that it was the first TIF in Pittsfield Township, and she’d like it to be the last.

Lirones read aloud a section of a letter that John McCulloch, director of the Huron Clinton Metro Authority – which runs the metroparks – had sent to Pittsfield Township opting out of the CIA. [.pdf of McCulloch letter] It described the impact of various tax captures – from entities like downtown development authorities, among others – that results in about $1 million in tax revenues being diverted from the metroparks. Lirones concluded by saying that opting out can be done politely, for very credible reasons.

In addition to Washtenaw County and Pittsfield Township, the Ann Arbor District Library has also signed a tax-sharing agreement with the CIA. Opting out of the CIA are the Saline District Library, the Huron Clinton Metro Authority, and Washtenaw Community College. WCC trustees made that decision at their Nov. 26 meeting.

Communications & Commentary: Pittsfield Twp. State Street CIA – Board Response

Ronnie Peterson (D-District 6) asked whether a policy would be developed to guide the review of TIF proposals when they come forward. The board had previously discussed that approach. He noted that the board’s vote on the Pittsfield Township CIA still stands, and he’s in support of that. But a lot of questions have been raised by other commissioners, he added, and any community could come forward with the same kind of TIF proposal.

Board chair Yousef Rabhi (D-District 8) said he’s spoken to staff members who are working on a policy. The staff from the county’s equalization department, the office of community & economic development, and the brownfield authority board are collaborating to develop a TIF policy. He hoped that staff would have something for the board to review later this year or in early 2014. It’s important to have a good rationale for approving these agreements, Rabhi said.

Communications & Commentary: Platt Road Advisory Committee

Yousef Rabhi reported that the citizens advisory committee for the county’s Platt Road property – the site of the former juvenile center, at 2260 and 2270 Platt Road – met for the first time. He described the feedback from citizens who attended the meeting as very positive, and that they were grateful they had a voice in this process.

The board had voted to create the committee at its Sept. 18, 2013 meeting. Members are: county commissioners Rabhi and Andy LaBarre, who both represent districts in Ann Arbor; Ann Arbor city councilmember Christopher Taylor; three county senior managers – Bob Tetens, Mary Jo Callan and Greg Dill; Jennifer Hall, director of the Ann Arbor housing commission; and six residents – Jeannine Palms, Vickie Wellman, Amy Freundl, Ron Emaus, Peter Vincent and Robb Burroughs.

The idea of an advisory committee to help with the dispensation of this property was first discussed at the board’s July 10, 2013 meeting. It was included in an overall strategic space plan for county facilities, which proposed demolishing the former juvenile center and exploring redevelopment of the site for affordable housing, alternative energy solutions, and county offices. Details of how the advisory committee would be appointed, as well as the committee’s formal mission, was an item to be worked out for a board vote at a later date.

The resolution approved on Sept. 18 set a broader mission: to “provide recommendations to the Board of Commissioners relative to disposition, including an alternatives analysis; and preferred methods of community engagement for the Board of Commissioners to undertake during the disposition process.”

The resolution also set a deadline of Dec. 31, 2013 for the committee to deliver its analysis and recommendations to the board.

Communications & Commentary: Public Health

County administrator Verna McDaniel reported that the state has approved the appointment of Ellen Rabinowitz as interim health officer for Washtenaw County.

From left: Ellen Rabinowitz, the new interim public health officer; Jennifer Brassow, finance administrator for the county’s public health department; and outgoing public health officer Dick Fleece.

Rabinowitz currently serves as executive director of the Washtenaw Health Plan and will retain that position as well. She was appointed interim by the county board at its Nov. 6, 2013 meeting, pending approval from the state Dept. of Community Health.

The appointment is spurred by the retirement of current health officer Dick Fleece, effective Dec. 28.

Later in the meeting, Ronnie Peterson (D-District 6) asked about the status of creating a public health board. Both Peterson and Conan Smith (D-District 9) have previously pressed to form such a board, which the county had dissolved several years ago.

Rabinowitz told commissioners that she’s working with the county administrator to develop a document that she plans to present to the board at its Dec. 4 meeting. The document will lay out all the issues that need to be explored in reestablishing the board of public health, including budget impacts, potential composition, and how it would relate to other existing boards.

Communications & Commentary: Appointments

Ronnie Peterson (D-District 6) asked about the appointments process. Board chair Yousef Rabhi (D-District 8) explained that commissioners had received a packet of applications to various boards, committees and commissions, and that an appointments caucus would be held the following night, Nov. 21, prior to the board’s working session. [That caucus, which The Chronicle attended, drew only two commissioners – Rabhi and Conan Smith (D-District 9), who both represent districts in Ann Arbor.]

Rabhi indicated that nominations would be brought forward for a board vote on Dec. 4.

Peterson asked how the openings had been publicized. Rabhi replied that they were posted on the county’s website. Pete Simms of the county clerk’s office, who manages this process, elaborated by describing various ways that the information had been advertised and publicized in print, online and on the radio.

In addition, the deadline had been extended until Dec. 1 for openings on three groups: the southeast Michigan’s Regional Transit Authority (RTA); the Washtenaw County historic district commission; and the Washtenaw County food policy council. More information about these positions is posted on the county’s website.

Peterson hoped the board could discuss how to generate more interest in the community for applying to the county’s various volunteer boards, commissions and committees.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Alicia Ping, Yousef Rabhi, Conan Smith, Dan Smith.

Absent: Rolland Sizemore Jr.

Next regular board meeting: Wednesday, Dec. 4, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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DDA board members study the budget proposal they approved at the March 2 meeting. From left to right: Bob Guenzel, Sandi Smith, Russ Collins. Obscured, sitting between Guenzel and Smith, is John Mouat. (Photo by the writer.)

For FY 2012, the DDA is budgeting for $20,118,601 in total revenues – of that amount, $3,893,943 is forecast to come from tax capture, $16,162,752 from parking revenues, and $61,906 from interest earnings. Budgeted expenses, at $20,631,328, will exceed revenues by $512,727.

The board has not yet incorporated into its budget the likely revisions that will be made to the DDA’s contract with the city of Ann Arbor, under which it manages the city’s public parking system. Those contract revisions are expected to result in a total parking-contract-related payment to the city of $2.26 million in FY 2012. The approved DDA budgets for FY 2012 and 2013 include only the roughly $1 million of payments to the city that the DDA is currently obligated to make.

While the DDA expects to be drawing down its fund balances over the next two years – due in large part to the expense of the Fifth Avenue underground parking structure that’s under construction – the longer-range forecast by the DDA shows increases in revenue that are expected to replenish reserves. The DDA estimates that its tax capture revenue will increase from its current level of roughly $3.9 million to $4.7 million by 2020. Parking revenues are also forecast to increase – due in part to the increase in parking space inventory offered by the underground garage, but also due to increases in parking rates – from an estimated $16 million next year to $22 million by 2020.

About the underground parking garage, at the February 2009 board meeting, Russ Collins had said the board needed to keep alert for their next projects after “this pig makes it through the python.” At Wednesday’s meeting, mayor John Hieftje alluded to Collins’ remark in trying to emphasize the long-range projected financial health of the DDA.

In the other business item handled by the board at its Wednesday meeting, Hieftje cast the lone vote of dissent on a vote to approve $45,000 out of $50,000 for a discretionary management incentive that’s part of the DDA’s contract with Republic Parking, which manages day-to-day operations for the city’s parking system.

The board also heard its usual round of committee reports; however, no one addressed the board during either of the opportunities for public comment. Highlights from Ray Detter’s report from the Downtown Citizens Advisory Council included an update on plans for the new Blake Transit Center and a report from the city’s panhandling task force.

DDA Budget

On the board’s agenda was the approval of an operating budget for fiscal years 2012 and 2013. For FY 2012, the DDA is budgeting for $20,118,601 in total revenues – of that amount, $3,893,943 is forecast to come from tax capture, $16,162,752 from parking revenues, and $61,906 from interest earnings.

Budget: Background

For FY 2012, budgeted expenses will exceed revenues by $512,727 – expenses total $20,631,328. Budgeted expenses do not include terms of a new parking agreement under which the DDA manages the public parking system for the city of Ann Arbor. The $1,010,930 city payment that’s in the budget is based on the current arrangement between the city and the DDA. Under that arrangement, the DDA pays the city parking proceeds from the old YMCA lot and the 415 W. Washington lot, plus around $800,000 for the city’s street repair funds – an amount related to the cost of maintaining on-street parking spaces.

So the DDA’s FY 2012 budget does not provide for the equivalent of an additional $2 million “rent” payment to the city, which is currently being negotiated by two “mutually beneficial” committees (MBCs) – one consisting of city councilmembers and the other consisting of DDA board members.

A Feb. 28 meeting of the two committees had been announced four days earlier to discuss a draft of a new contract. But that meeting was canceled, when councilmembers Carsten Hohnke and Christopher Taylor were unable to accommodate the meeting, having just arrived back from their vacations. Board chair Joan Lowenstein appeared at the DDA offices at the scheduled time (8:30 a.m.) to advise any potential attendees that the meeting would not be taking place. Besides The Chronicle, the city’s public services area administrator Sue McCormick received the news of the cancellation from Lowenstein. The meeting is now scheduled for March 7.

At Wednesday’s board meeting, during his report from on the MBC’s activities, Roger Hewitt indicated that the two committee hadn’t met. But he reported that DDA board members who are attorneys – Bob Guenzel, Joan Lowenstein, and Gary Boren – had met with the DDA’s legal counsel, Jerry Lax, and had drafted a new contract. Because so many amendments would have been necessary, said Hewitt, they decided to try replacing the contract completely.

The DDA’s 10-year plan does factor in a new parking agreement with the city, under which all of the parking-related payments by the DDA to the city would come from a percentage of gross parking revenues. The percentage-of-gross numbers currently under discussion to be paid to the city are 14-15%, which would amount to a total payment of $2.26 million in FY 2012. The idea is to wrap into a single payment – based on a percentage-of-gross calculation – what’s currently a set of separate payments. Those include the “rent” payment of $2 million, a payment into the city’s street repair fund of around $800,000, and the revenues from two specific parking lots (the old Y lot and the 415 W. Washington lot). [.pdf of draft DDA draft budgets for FY 2012 and 2013]

Budget: Board Deliberations

Bob Guenzel was interested in getting some clarification on the status of the two additional payments Hewitt had mentioned in his review of the budget. Hewitt explained that they were not broken out separately. The $1,010,930 figure listed under “city payments” includes a payment of around $800,000 to the city’s street repair fund and roughly $200,000 in revenue from the old Y lot at Fifth and William and the 415 W. Washington parking lot.

By way of background, neither the old Y lot nor the 415 W. Washington lot were part of the city-DDA parking contract that was last amended in 2005 – with a term through 2015, which the DDA has the option to renew for at least three years beyond that.

But the FY 2010 city of Ann Arbor budget included a revenue assumption from the installation of parking meters in certain areas near downtown. And Sandi Smith – who represents Ward 1 on the city council, in addition to serving on the DDA board – led an effort to forestall installation of the meters by identifying alternate sources of revenue to the meters. That included a June 15, 2009 resolution passed by the council and a corresponding resolution passed by the DDA board on July 1, 2009, to raise rates and to direct revenue from the 415 W. Washington lot to the city of Ann Arbor, instead of the DDA.

The request to direct Fifth and William lot revenue to the city was handled at the city council’s Dec. 21, 2009 meeting, and the DDA complied with the city’s request at its Jan. 6, 2010 board meeting.

During deliberations on Wednesday, mayor John Hieftje stressed that the budget could be modified to accommodate additional payment to the city. He also pointed to increased tax revenue to the DDA from two new developments in the DDA tax capture district – Zaragon Place II at Thompson and William, and 601 S. Forest.

Russ Collins drew out the fact that the budget that the board was approving, when modified, would increase the $512,727 deficit in FY 2012 to around $1.75 million. [The FY 2012 budget includes a $1 million payment to the city, which is currently obligated. If the parking contract between the city and the DDA is revised so that the DDA pays the city 14% of gross parking revenues, then for FY 2012 it would work out to a total payment of roughly $2.26 million, or an additional $1.2 million, which together with the currently budgeted number of $512,727 yields the $1.7 million figure mentioned by Collins.]

Collins noted, however, that even with adjustments to the budget that will be necessary if the DDA accepts a revised parking contract with the city, the parking fund will still show a net positive balance. He also noted that parking revenues have historically been conservatively budgeted. It was this longer-term view that prompted Hieftje to adduce the pig-in-the-python analogy that Collins had previously made, though he narrowly missed on his first try, calling it a “pig in the snake.”

Board chair Joan Lowenstein mentioned the deferred maintenance on parking structures that is a part of the budget plan – the usual $2 million transfer from the parking fund to the parking maintenance fund will not take place for the current fiscal year, FY 2011, in order to maintain adequate reserves in the parking fund. The maintenance activities that will be delayed, Lowenstein stressed, are those identified by the DDA’s engineering consultant, Carl Walker Inc., as non-time-critical issues.

Guenzel said that as the newest member of the board, he appreciated the hard work that had gone into the preparation of the budget. He appreciated the clarity of the presentation. He noted that if someone simply picked up the budget, you’d say there’s a deficit, but that the supporting material put that deficit in context.

Outcome: The DDA board unanimously approved the organization’s budgets for FY 2012 and 2013.

Parking Management Incentive

Before the DDA board was a resolution to pay $45,000 as the discretionary component of a management incentive for Republic Parking. While the city of Ann Arbor contracts with the DDA to manage the public parking system, the DDA in turn contracts with Republic to handle day-to-day operations. The DDA’s contract with Republic covers Republic’s expenses – roughly $5.8 million annually – plus pays Republic a “management incentive” of up to $200,000 per year. Of that amount, $150,000 is paid in monthly installments as a part of the contract, with the remaining $50,000 left to the discretion of the DDA board.

In making a recommendation to pay Republic $45,000 out of the maximum $50,000, a memo from DDA deputy director Joe Morehouse points to: (1) parking customer survey results that show 6-7% responses in the lower two scale points on a 5-point scale, and over 55% in the top two scale points; (2) an operating surplus that exceeded budget by $243,438; (3) independent facility cleanliness audit ratings of 93.7% – a slight increase over last year’s average of 93.4%; and (4) a dead ticket average of 1.61%, which is within the target of 1.75%, but more than last year’s 0.65%.

Parking Management Incentive: Board Deliberations

In the course of introducing the background to the resolution, Roger Hewitt stressed that the incentive is supposed to be awarded based on measurable criteria, which he then reviewed. He praised Republic Parking’s manager, Mark Lyons, for bringing Republic’s expenses in under budget – through judicious scheduling of personnel. Hewitt also praised Lyons for the cooperative spirit in which Republic had worked with the DDA on various pilot programs, such as the “early bird” program for the top floor of the Fourth and William deck.

Keith Orr wanted to know how many surveys had been completed to yield the data in Morehouse’s memo. Morehouse explained that the data was based on roughly 4,000 surveys. Board members noted that the percentage of non-responsive surveys had increased from last year to this year – from 12.1% to 20.1% – but satisfied themselves that the numbers reflected satisfaction with the service.

Part of the supporting memo highlighted a $5 prepay program for event parking that Republic had helped implement – it’s a way for people to pay on entering a parking structure, so that when the event is over, the mass exit from the structure flows more smoothly. Board member Russ Collins quipped that “not everyone considers that a highlight.” [The system makes parking validation somewhat complicated for organizations like the Michigan Theater, which offers such validation as a benefit of membership – Collins is executive director of the Michigan Theater.] Hewitt said the idea behind the program is to deal with the challenge of the large number of vehicles associated with some special events, and that the DDA and Republic were working to find a way to address Collins’ concerns.

Mayor John Hieftje cast a vote of dissent on the approval of the incentive, as he has in previous years, but this year offered no comment at the board table on the issue.

In 2009, both Gary Boren and Hieftje voted against the award of the management incentive. It was reported in The Chronicle this way:

Hieftje said that while he thought Republic does a great job, with current economic conditions, now is not the time to hand out a bonus.

Board member Gary Boren said that when he first joined the board, the cultural practice of the bonus mystified him, characterizing it as “an expected tip” at the end of the year. He said he still didn’t understand it. Hewitt said the discretionary amount was previously greater and had been changed to the fixed fee plus a discretionary amount. DDA staff has argued for retaining some discretion, Hewitt said, so that the DDA could have some clout.

And last year, Hieftje alluded to the fact that he’d expressed his reasons before about why he did not feel the award of an incentive was appropriate.

Outcome: The board voted to approve the award of the $45,000 management incentive to Republic Parking, with dissent from Hieftje.

Communications, Committee Reports, Commentary

The board’s meeting included the usual range of reports from its standing committees and the Downtown Citizens Advisory Council. Every board meeting includes two opportunities for public commentary – one near the start of the meeting and the other at its conclusion. No one addressed the board during those two opportunities.

Comm/Comm: Money

Roger Hewitt reported out from the board’s bricks and money committee that parking revenues had basically been flat compared to last year – they were down less that half a percent. [$1,161,632 in January 2011 compared to $1,166,545 January 2010]. Hourly patrons were down by around 4%, he reported. [169,653 this January, compared to 177,111 a year ago for January.]

Comm/Comm: Bricks

John Splitt gave a report about the progress on capital projects, specifically the construction of the Fifth Avenue underground parking garage. He said that the previous Saturday, 567,000 5,670 yards of concrete had been poured, making it the largest pour in the city in anyone’s recent memory. The pour took place over the course of 37 uninterrupted hours – from 5 a.m. on Saturday to 6 p.m. on Sunday. A total of 30 trucks had been used, which together made 570 trips. It had been boring, he said, which was a good thing. None of the various back-up systems that had been put into place needed to be used.

Dewatering of the site continues, he said, and it’s hoped that the pumps can be turned off by mid-April. All lanes of Division Street are expected to be open by mid-March, he reported. There would be temporary lane closures in the future, but the permanent closure would end, he explained. [Fifth Avenue between Liberty and William will remain completely closed, though it might be reopened this summer in time for the 2011 Ann Arbor art fairs, to be held July 20-23.]

When asked by Gary Boren, Splitt said that overall the project is on schedule. John Mouat, who is an architect, commented that usually it’s a significant milestone when the foundation is complete and a building emerges above the ground. Although the underground parking structure won’t reach that visual milestone, it’s roughly at the same stage, he said.

Comm/Comm: Economic Development Committee

Joan Lowenstein reported out on the last meeting of the economic development committee, when committee members heard a presentation from Mary Kerr, president and CEO of the Ann Arbor Area Convention and Visitors Bureau. At the same meeting, the committee heard a presentation from Ann Arbor SPARK’s director of business development, Jennifer Owens.

Lowenstein told the board that feedback from Kerr and Owens about the downtown included the fact that it is perceived as safe and that people like its vibrancy, walkability and eclectic mix. Lowenstein asked her board colleagues to guess what stumbling block had been identified by the two presenters, and there was no shortage of voices around the table who said, “Parking!” When Lowenstein confirmed a perceived lack of adequate parking had been the negative point, John Mouat quipped that he was “shocked – shocked” that this could be the case.

Lowenstein said Owens had reported that many businesses downtown have employees who simply prefer to drive their cars. At the committee meeting, which The Chronicle attended, Owens said that one business owner had told her the average employee at their company makes $90,000 a year and that they simply were not interested in riding the bus. Owens had also pointed to the perception that development of a new building in downtown Ann Arbor to house a new company was perceived in the business community as slow. It’s perceived as requiring around two years to move it through the approval process – the business community has an expectation of closer to one year, she said.

The image of the state of Michigan is also a big hurdle for marketing Ann Arbor, Lowenstein reported from the presentations. However, once people visit, they’re sold.

Lowenstein reported that the Ann Arbor CVB had a budget of around $2 million a year. [It receives its funds from a hotel accommodations tax, which was raised from 2% to 5% in November 2008 by the Washtenaw County board of commissioners, to bring the tax rate in line with other counties in the state.] In 2010, Lowenstein said, 152 meetings had taken place in Ann Arbor, which resulted in $14.6 million in direct spending in the area – Kerr had characterized that as a 16:1 return on the investment. Lowenstein also noted that the CVB invites travel writers to visit and that when they write about Ann Arbor for various national publications, that gives the city advertising exposure that doesn’t need to be paid for.

Lowenstein reported that Kerr’s experience is that visitors to Ann Arbor do not report parking to be an issue. Russ Collins noted that the only thing worse than having a parking problem is not having a parking problem.

Lowenstein also reported that Kerr had said the outlying hotels say their guests all want to be downtown.

Lowenstein concluded that given the efforts of the CVB and Ann Arbor SPARK, it’s not realistic for the DDA to become a centralized repository for all things related to downtown marketing. Instead, she said, it probably makes sense for the DDA to fill in gaps and to work with the CVB and SPARK. To illustrate the kind of thing the DDA might do, Lowenstein suggested including contact information for the CVB on the wayfinding signs that the DDA has installed in the downtown area.

Comm/Comm: Transportation

John Mouat reported out from the DDA’s transportation committee. They’d heard a presentation from the Ann Arbor Transportation Authority on the development of three different scenarios for the AATA’s transportation master plan for countywide service. [See Chronicle coverage: "Transit Planning Forum: Saline Edition"] Mouat said that the next meeting of the transportation committee would focus on two-wheeled vehicles.

Commenting on the AATA transportation planning effort, mayor John Hieftje said he was hearing “overwhelming support” for the “Smart Growth” scenario. He also said that the latest idea for implementing a high-capacity connector along the Plymouth-State Street corridor was a “gondola” type system where the vehicles would be suspended from cables strung between towers.

Comm/Comm: Partnerships – Roger Fraser

Russ Collins began his report from the partnerships committee by noting the announcement of city administrator Roger Fraser’s departure at the end of April. He said he appreciated the ability to work with Fraser. He then drew a laugh from the board by thanking Bob Guenzel for agreeing to step in for Fraser. Guenzel revealed he’d been paying attention, by cheerfully stating, “I’m retired!” [Guenzel stepped down as Washtenaw County administrator last year.]

At the conclusion of the meeting, mayor John Hieftje said that Fraser is excited to be going to work for the state treasurer’s office and bringing his expertise to bear as deputy treasurer. He also said that the city had a staff organization in place so that people would not notice even a ripple with his departure.

Comm/Comm: Partnerships – Energy Grant Program

Russ Collins gave an update on the energy saving grant program, which is a way for downtown businesses to get DDA-funded energy audits and to have a portion of the costs for those physical changes recommended by the audit matched with DDA funds. Collins said the program would be scaling back a little bit and that they would need to make decisions about how to allocate expenditures between audits and the matching dollars on projects that business owners wanted to undertake. [The budget for FY 2012 includes $100,000 for the energy grant program – over the last three years, the DDA has allocated a total of $650,000 for the program.]

Sandi Smith pointed out that the resolution recently passed by the city’s energy commission, on Feb. 8, 2011, includes a resolved clause encouraging the continuation of the program. That clause reads:

Now, therefore be it resolved that the Ann Arbor Energy Commission formally acknowledges the effort and success of the Ann Arbor Downtown Development Authority’s Downtown Energy Saving Grant Program and encourages the DDA to provide continued funding for the program in their 2011-12 budget.

Mayor John Hieftje said that he sits on the city’s energy commission and said that there’s an acknowledgment on the commission that the program might not be able to be funded. He said he felt that the recent state PACE (Property Assessed Clean Energy) legislation might make up the gap.

Joan Lowenstein pointed out that PACE is designed more for larger projects, whereas the DDA’s program makes it possible even for smaller businesses to contemplate making energy improvements. Keith Orr said that Dave Konkle – former head of the city’s energy program and now consultant for the DDA on the energy saving grant program – would be in a good position to communicate with those businesses he’s worked with on the DDA’s program to make sure they’re aware of the various options that are available, including PACE.

Comm/Comm: Planning, Urbanness, Open Space

Sandi Smith reported out from the partnerships committee meeting that Wendy Rampson, head of planning for the city of Ann Arbor, had attended the last committee meeting to discuss what might be included in an effort to plan for the downtown area in a more detailed way than current master plans envision. The idea, she said, is not to focus on one specific individual lot, but rather to plan a larger area of the downtown.

By way of background, Rampson’s visit came in connection with a proposal for the DDA to lead an effort to redevelop city-owned parcels that are currently used as surface parking lots. At its Jan. 18, 2011 meeting, the city council postponed consideration of a resolution that would have formally established that DDA-led effort. It’s now on the city council’s March 7 agenda.

Smith reported that city of Ann Arbor park planner Amy Kuras would attend the committee’s next meeting to discuss open space in the downtown. Russ Collins commented on a theme he’s often explored, namely the idea that Ann Arbor is ostensibly a suburban community and that when people talk about the downtown, often they speak of it as if it’s an urban area. But the types of parks that are effective in a suburban area, Collins said, are not necessarily effective in an urban area. In urban areas, he said, density, activity and noise are positive attributes, even though those features are considered anathema in suburban areas. It’s important to separate the urban from the suburban, Collins concluded.

Mayor John Hieftje noted that the recent revision to the PROS (Parks and Recreation Open Space) plan included University of Michigan property in its catalog of open spaces – at least in the footnotes – that is available to downtown visitors. Approval of the PROS plan is on the city council’s March 7 agenda.

Comm/Comm: Blake Transit Center

During his update from the Downtown Citizens Advisory Council, Ray Detter said that the planned replacement of the Blake Transit Center was a topic of discussion at the advisory council’s meeting the evening before. The advisory council, he said, was pleased with the latest plan, which included some improvements to the customer services area. They were also pleased, Detter said, with the planned pedestrian connection between Fourth and Fifth avenues. The building itself, Detter said, was planned to be a LEED platinum level building. The foundations, he said, would be designed to support future additional development beyond the height of the currently planned two-story building.

Detter expressed  a hope that Blake would become a real transit center, not just a bus station, perhaps in the context of the planning effort that the Ann Arbor Transportation Authority is currently undertaking to develop a countywide transportation master plan.

Comm/Comm: Downtown Panhandling Task Force – “Have a heart, give smart”

Also during his update from the Downtown Citizens Advisory Council, Ray Detter reported on the efforts of a city council-appointed task force that had been established in September 2010 and charged with coming up with recommendations for addressing the problem of panhandling downtown. [Detter is a task force member. Though officially called the "downtown street outreach task force," it's informally known as the "panhandling task force." Previous Chronicle coverage: "Ann Arbor Task Force Consults Panhandlers"]

Detter reported that the task force had settled on a slogan – “Have a heart, give smart” – for an educational program to help downtown visitors act in a responsible way towards panhandlers. He said that generally speaking, panhandlers are not homeless. The task force’s recommendation hopes to establish a sustainable communication system that will make downtown visitors aware of what options exist. The task force is also suggesting some updates to the city’s panhandling ordinance, which would prohibit soliciting funds within 12 feet of the downtown library, or near the entrance to certain pedestrian passageways.

Detter said the task force would be making its report to the city council at its March 21 meeting.

Comm/Comm: Library Lot RFP Committee

John Splitt reported that the committee charged with reviewing proposals for future use of the top of the Fifth Avenue underground parking structure – known as the Library Lot – had not met since the DDA board’s February meeting. He indicated that the committee would be meeting on March 3. [Later that day, the announcement came that the meeting had been postponed due to anticipated lack of full attendance. Subsequently, the meeting was rescheduled for Tuesday, March 8, 2011 from 3-5 p.m. in the city hall fourth floor conference room.]

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

Absent: Newcombe Clark

Next board meeting: Noon on Wednesday, April 6, at the DDA offices, 150 S. Fifth Ave., Suite 301, Ann Arbor. [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

-
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

-
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

-
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.

As mayor John Hieftje looks on, Rene Greff addresses the DDA board at the beginning of Wednesdsay’s meeting, asking them not to approve the transfer of $2 million to the city of Ann Arbor. Greff is a former DDA board member, but addressed the board as a downtown business owner – of Arbor Brewing Company.  (Photos by the writer.)

They were at the table, however, for the final vote on whether to pay $2 million to the city, which the DDA is not obligated to pay under terms of its existing parking system agreement.

The 7-4 outcome of that vote on the 12-member body, of which 11 were present, was enough to write a $2 million check to the city. Voices of opposition to the fund transfer came not only from inside the board itself, but also from the business community during public commentary. Two former DDA board members were in the audience.

An initial opinion given at the meeting by DDA legal counsel Jerry Lax was that Hieftje and Smith could participate in the deliberations. But when an amendment was proposed, which had a side-effect of removing the basis for Lax’s earlier advice, Smith recused herself. As it became apparent that Hieftje intended to remain at the table, board member Jennifer Hall raised the point of order again, and Lax indicated Smith’s recusal was appropriate and that Hieftje should follow suit. Finally, Hieftje accepted the opinion of the DDA’s legal counsel and took a seat in the audience, but contended that he’d been given different advice from the city attorney’s office. When the amendment failed, Smith and Hieftje were back at the table.

Another board resolution that generated animated discussion, but was ultimately tabled, involved a systematic re-allocation of funds, in $60,000 increments, to a reserve to pay for the restoration of downtown police beat patrols. The re-allocation would have come from monies previously slated to fund the Howell-Ann Arbor commuter rail project (Washtenaw Livingston Rail Line – WALLY).

The committee reports to the board did not involve the kind of blunt talk that emerged during discussions of the two resolutions. But two topics reported out from the board’s transportation committee can be expected to receive wider visibility in the coming months: (i) Where will the two employees of the getDowntown program be housed? and (ii) Can there be an express Ann Arbor-Ypsilanti bus?

In this meeting report, we focus exclusively on the $2 million transfer from the DDA to the city of Ann Arbor.

$2 Million: Background Sketch

The overall context of the $2 million payment is the 2005 renegotiation of the parking agreement between the city of Ann Arbor and the DDA. Since 1992, the DDA has administered the city’s parking system on properties owned or leased by the city of Ann Arbor.

Set to expire in 2012, the agreement was extended in 2005 through 2015 – in light of the financial challenges the city faced that year – to provide additional revenue to the city. In broad strokes, it was a $1 million-per-year deal, with the added wrinkle that the city could request up to $2 million from the DDA in any given year, provided the total over 10 years did not exceed $10 million.

A point that both Roger Hewitt and Leah Gunn emphasized at Wednesday’s board meeting was that in 2002, the city had elected to allow the DDA to collect revenues from its metered on-street parking system. Part of the bargain was that the DDA paid into the city’s street repair funds. From the 2002 agreement:

The DDA shall provide a fund transfer to the City for FY2002/2003 of $520,000 to the Major Streets Fund and $150,000 to the Local Streets Fund for a total of $670,000, which will be transferred in equal monthly installments.

The agreement specifies that the amount increases each year based on the consumer price index (CPI), which has now brought the amount to around $800,000. The annual net revenue to the DDA from meter collections, said Hewitt at Wednesday’s meeting, was around $2 million. Hewitt noted that this was an aspect of the discussion that is forgotten. There was not a lot of opposition, Hewitt noted, when the city decided to give the DDA over $2 million a year in revenue.

Roger Hewitt holds a new e-park card that will be piloted as a way to pay for time in the new electronic parking stations that have been installed in some areas downtown.

Gunn recalled how the discussions in the late 1990s with the city about the metered parking revenues had not been positive. Something that had been lost at the very beginning, she said, was the fact that the city had given the DDA, with no strings attached, the ability to collect money from the parking meters. She noted that she had been a member of the DDA board for quite some time and went through negotiations with the former mayor and some members of the city council who were adamantly opposed to allowing the DDA to collect meter revenues.

After the election of John Hieftje, Gunn said, there had been a change in attitude. The city council and mayor told the DDA that they thought the DDA could do a better job of managing it. And she said that she felt that the DDA had in fact done a better job of managing the metered parking. But that revenue, she stressed, had been given to the DDA with no strings attached. She concluded that the money really did belong to the city of Ann Arbor.

In reflecting on the metered parking revenues, Hieftje said that looking back, that decision to allow the DDA to collect the revenues had been a mistake.

The renegotiation of the parking agreement in 2005 to stipulate payment by the DDA of $1 million a year for 10 years did not change the arrangement involving meter collections.

At several points during deliberations, several board members cited the more recent history of the city-DDA relationship with respect to the 2005 agreement.

Sandi Smith began her contribution to the deliberations by noting that she spoke from the perspective of the person who had introduced the motion back in January of 2009, calling on the DDA to begin negotiations on the parking agreement. She said she knew that the city was going to be needing the $2 million six years ago when the 2005 agreement was struck. It was $10 million over 10 years, with the option to draw $2 million a year, and the city had drawn $2 million a year for five years. She said she knew that was the way it was going to go, and that she knew that the city would then want that next $2 million.

That was the reason Smith had brought the request forward at the city level, because the line item in the second year of the city’s financial plan developed for the fiscal years 2010 and 2011 showed the $2 million in the plan. She said she had wanted to get to the point where they could have a dialogue. The “crystal ball” was not working in 2005, she said – they weren’t able to know exactly how bad the situation would be in Michigan and for the city.

A timeline overview of the last 16 months:

• Jan. 20, 2009: City council passes a resolution asking the DDA to begin discussions of renegotiating the parking agreement between the city and the DDA in a mutually beneficial way.
• March 4, 2009: DDA board establishes a “mutually beneficial” committee to begin discussions of the parking agreement between the city and the DDA. On the committee: Roger Hewitt, Gary Boren, Jennifer S. Hall, and Rene Greff. The DDA’s resolution establishing their committee calls on the city council to form its own committee.
• May 20, 2009: During the mid-year DDA retreat, mayor John Hieftje states publicly that city councilmembers object to the membership of Jennifer S. Hall and Rene Greff on the DDA’s “mutually beneficial” committee.
• June 3, 2009: DDA board chair Jennifer S. Hall removes herself from DDA’s “mutually beneficial” committee, replacing herself with Russ Collins.
• June 15, 2009: Mayor John Hieftje nominates councilmembers Margie Teall (Ward 4), Leigh Greden (Ward 3) and Carsten Hohnke (Ward 5) to serve on the city council’s “mutually beneficial” committee, and they’re confirmed at the city council’s July 20 meeting.
• July 1, 2009: DDA board chair Jennifer S. Hall appoints Sandi Smith to replace outgoing DDA board member Rene Greff (whose position on the board is filled with Newcombe Clark) on the DDA’s “mutually beneficial” committee. Smith is also a city councilmember, representing Ward 1.
• August 2009: Leigh Greden is defeated in the Democratic primary by Stephen Kunselman.
• August-December 2009: Sandi Smith, the chair of the DDA’s “mutually beneficial” committee, reports at each monthly DDA board meeting that there is nothing new to report.
• Dec. 5, 2009: Dissolution of the DDA is included in an “everything is on the table” list for discussion at the city council’s budget retreat.
• January-April 2010: 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.

Additional background in Chronicle coverage: “DDA to Tie $2 Million to Public Process”

$2 Million: Business Community Opposition

During public commentary at the start of the meeting, three representatives of the business community weighed in against the $2 million transfer to the city from the DDA.

Tony Lupo, director of sales and marketing for Salon Vox, spoke on behalf of the Main Street Area Association. Rene Greff, who co-owns the Arbor Brewing Company in downtown Ann Arbor and is a former DDA board member, spoke against the transfer, making many of the same points that she articulated in an email she’d sent to board members.

And Kyle Mazurek, vice president of government affairs for the Ann Arbor Area Chamber of Commerce, read from a prepared statement:

• We believe that it undermines the DDA’s independence and autonomy, and impedes its ability to achieve its stated mission, which is “to undertake public improvements that have the greatest impact in strengthening the downtown area and attracting new private investments.” We also believe that it undermines future DDA Boards.
• We believe that there’s a certain degree of impropriety in the City seeking monies from the DDA to cover various operating expenses and budget shortfalls. Honesty and transparency in budgeting isn’t achieved through the transfer of monies from one organization to another, particularly when those monies have another intended use.
• We believe that the DDA has fulfilled the terms of the 2005 parking agreement, and that therefore this additional $2 million transfer violates that agreement.
• We believe that this transfer will cause the DDA to forego other, real priorities that are in keeping with its stated mission.
• We believe that this transfer sets a dangerous precedent for the DDA as the future filler of City budget holes.
• We believe that reliance on City assurances of future good faith discussions aimed at a mutually beneficial agreement is misplaced. Past practice is informative in this regard – and one need look no further than the 2005 parking agreement. What happened to the beat cops. What happened to the 3-site plan. What’s currently happening with respect to the present parking agreement set to expire in 2015 – the DDA has fulfilled its contractual obligation but now is being asked for more.
• We believe that this transfer undermines the DDA’s financial foundation in that it digs even deeper into fund balances. Last year it was publicly stated that as a rule of thumb the DDA should maintain a minimum fund balance reserve of 15 to 20 percent. At first blush it appears this transfer pushes that percentage well below this target range.
• We believe that this transfer results in no quantifiable return to the DDA district.
• We believe that a consequence of this transfer will be increased parking rates and additional proposals akin to increasing parking meter enforcement hours – the costs of which will be unfairly borne by downtown businesses, their employees and patrons.
• We believe that the last minute nature of today’s resolution was avoidable. A truly mutually beneficial agreement could’ve been reached before now. In January 2009, City Council called for mutually beneficial discussions between the respective entities to commence. In March 2009, the DDA sat its committee. It’s well known that the City must take final action on its proposed budget on the third Monday in May.
• We believe that the DDA is enabling the City to delay tough budgetary decisions aimed at realigning spending priorities, enacting essential reforms and creating a sustainable budget moving forward.
• We believe that this transfer is inconsistent with many of the DDA’s stated parking system principles – such as the public parking system can and should be financially self-sustaining, that parking users should pay for the system, and that parking revenues should be reinvested into the system and not redirected elsewhere.

$2 Million: The Term Sheet

The term sheet produced by the working group was introduced at Wednesday’s board meeting by the chair of the operations committee, Roger Hewitt. [.pdf of term sheet] It had been discussed at the DDA operations committee meeting the previous week.

Hewitt described it as a framework for the discussions to go forward. With respect to the length of the hoped-for agreement, Hewitt said the intent was to make it a relatively long-term agreement. That would allow both entities – the city of Ann Arbor and the DDA – to do long-term planning. The intent, Hewitt said, was to have an executed agreement in place by Oct. 31, 2010. But for the first fiscal year, he said, the DDA would pay the city $2 million. Under the framework, he continued, the DDA would take over responsibility for parking enforcement throughout the city, not just in the DDA district.

The DDA would take over enforcement of the meters, Hewitt said, using its own personnel – contracting with a third-party or through direct employment. The philosophy of enforcement would transition from a revenue-generating model to a customer service model, hoping ultimately to reduce the number of parking tickets and increase the level of compliance.

Hewitt indicated that there would be financial compensation to the city for parking enforcement but that the amount had not yet been determined. It’s expected that it would take 6-12 months to put the parking enforcement component of the agreement in place.

There are also certain services that the city currently performs within the DDA district which the DDA would take over. The cost savings to the city would be reflected in the agreement, Hewitt said. Those services dealt primarily with sidewalk issues – for example, tree plantings. There would effectively be a line drawn at the curb, he explained, where things that happen in the street are the city’s responsibility, and things that happened on the sidewalk would become the responsibility of the DDA.

In addition to parking enforcement, Hewitt continued, the DDA would take over code enforcement for those activities that happen on the sidewalks and in the alleys – it would not include building code enforcement. Switching over to the additional code enforcement, said Hewitt, is expected to take 12-24 months.

Finally, said Hewitt, the DDA would become the “initiation and implementation engine” for all city-owned surface parking lots in the DDA area. This had been primarily a city responsibility in the past, Hewitt said, and it would instead become primarily a DDA responsibility. Any action, he cautioned, would still require approval from the city council.

$2 Million: Outline of Deliberations

The board deliberations on the $2 million transfer lasted over an hour. Despite the intense nature of much of the conversation, there were moments of levity. The key points of the deliberations as they unfolded chronologically:

• Roger Hewitt gives a description of the term sheet produced by the working group.
• Jennifer S. Hall raises a point of order on a conflict of interest by John Hieftje and Sandi Smith, both of whom are paid salaries by the city of Ann Arbor. DDA legal counsel offers the opinion that their participation is allowed under a state statute providing exceptions for contracts between public bodies and that the resolution effectively amends the city-DDA parking agreement.
• Deliberations commence with an amendment proposed by Joan Lowenstein, accepted as friendly, that makes more explicit the relationship of the resolution to a contract amendment.
• Hall holds forth against the resolution, followed by Gary Boren, who says he’ll support tabling but not the resolution, followed by Newcombe Clark, who makes a motion for tabling. The motion for tabling fails with support only from Hall, Boren, and Clark.
• Leah Gunn holds forth in favor of the resolution, and moves to end deliberations and vote. The board opts to continue deliberations.
• Russ Collins agrees with Boren’s description of the facts of how the “working group” had been formed but reaches a different conclusion regarding the transfer, saying he supports it.
• Sandi Smith holds forth in favor of the resolution.
• Keith Orr offers a substitute resolution that makes explicit that the payment to the city is a “no-strings-attached” grant, which he dubs a Temporary Ann Arbor Relief Payment (TARP) to be paid as $1 million now and possibly $1 million later.
• Hall reiterates the point of order on a conflict of interest, now that the intent of Orr’s resolution is grant-like and not contractually based. Smith immediately recuses herself and takes a seat in the back row of the audience. Hieftje persists at the table and argues against Orr’s amendment. Hall reiterates the point of order. DDA legal counsel confirms his opinion that the grant-like nature of Orr’s resolution makes recusal appropriate. Hieftje retreats to the audience.
• Gunn, Hall, and Orr briefly discuss the merits of Orr’s amendment. It fails. Hieftje and Smith return to the table.
• Several board members deliberate further on the resolution as amended by Lowenstein.
• The resolution passes with dissent from Orr, Hall, Clark, and Boren. As John Mouat was absent, the motion still achieved seven votes, which is the majority needed for board action on the 12-member body.

The deliberations themselves highlighted key substantive issues, which can be listed out as questions.

Ethics: Is there a conflict of interest for city councilmembers like Hieftje and Smith deliberating on a resolution involving the transfer of money to the city of Ann Arbor?

Contracts: What, if any, is the contractual force of the resolution passed by the DDA? Specifically, can the city’s participation in the future public process be compelled by the DDA?

Organizational Identity: What is the relationship between the DDA and the city of Ann Arbor?

Key $2 Million Issue: Ethics

The question of mayor John Hieftje and councilmember Sandi Smith’s participation in the vote at Wednesday’s meeting was raised because of the specific nature of that vote, which transferred money to the public body that writes their paychecks. However, it’s possible to pose a more general question: Is there an inherent conflict built into simultaneously holding the position of city councilmember and DDA board member?

Ethics: Compatibility of Office

The question of whether it’s possible to hold simultaneously the office of councilmember and DDA boardmember is addressed in Michigan’s Act 566 of 1978. At first glance, the state statute appears to rule it out. The kind of incompatibility of office that is not allowed is expressed in the definition of “incompatible office”:

(b) “Incompatible offices” means public offices held by a public official which, when the official is performing the duties of any of the public offices held by the official, results in any of the following with respect to those offices held:
(i) The subordination of 1 public office to another.
(ii) The supervision of 1 public office by another.
(iii) A breach of duty of public office.

A city councilmember “supervises” the office of a DDA board member in the sense that city councilmembers must confirm the appointments of DDA board members. However, there’s an explicit exception in the statute for a DDA [emphasis added]:

(3) Section 2 does not prohibit a public officer or public employee of a city, village, township, school district, community college district, or county from being appointed to and serving as a member of the board of a downtown development authority under 1975 PA 197, MCL 125.1651 to 125.1681;

Moreover, the mayor – who is also a city councilmember under Ann Arbor’s system of government – holds a position on the DDA board that is specified in the enabling legislation for a DDA, Public Act 197 of 1975:

(g) “Chief executive officer” means the mayor or city manager of a city, [...]

Sec. 4. [...] an authority shall be under the supervision and control of a board consisting of the chief executive officer of the municipality and not less than 8 or more than 12 members as determined by the governing body of the municipality.

On Wednesday, Hieftje made reference to his position on the DDA board as stipulated in the state statute. That reference came in the context of the discussion with DDA legal counsel Jerry Lax, of Bodman LLP, about whether it would be appropriate for Hieftje and Smith to recuse themselves from the vote on the $2 million transfer.

Ethics: Conflict of Interest (Contracts)

To settle the specific issue of recusal on the $2 million deliberations, Lax appealed on Wednesday to a state statute, Act 317 of 1968 “Contracts of Public Servants with Public Entities.” He began by explaining that the relevant state statute is meant to “occupy the field” as expressed in its language. Specifically, the statute states:

15.328 Other laws superseded; local ordinances. Sec. 8. It is the intention that this act shall constitute the sole law in this state and shall supersede all other acts in respect to conflicts of interest relative to public contracts, involving public servants other than members of the legislature and state officers, including but not limited to section 30 of 1851 PA 156, MCL 46.30. This act does not prohibit a unit of local government from adopting an ordinance or enforcing an existing ordinance relating to conflict of interest in subjects other than public contracts involving public servants.

The statute prohibits the public servants from soliciting contracts with entities by whom they are employed:

(2) Except as provided in section 3, a public servant shall not directly or indirectly solicit any contract between the public entity of which he or she is an officer or employee and any of the following: (a) Him or herself. (b) Any firm, meaning a co-partnership or other unincorporated association, of which he or she is a partner, member, or employee. [...]

However, Lax pointed out that there was a specific exemption for contracts between two public entities [emphasis added]:

15.324 Public servants; contracts excepted; violation as felony. Sec. 4. (1) The prohibitions of section 2 shall not apply to any of the following: (a) Contracts between public entities.

Under that statute, Lax concluded, there is not a problem with the participation of Hieftje and Smith in the deliberations and vote. He noted that the bylaws of the DDA themselves contained their own prohibitions against conflicts of interest. The DDA bylaws read in relevant part:

Section 9 – Conflict of Interest. A director who has a conflict of interest in any manner before the Board shall disclose that interest prior to the corporation taking any action with respect to the matter. This disclosure shall become part of the record of the Board’s official proceedings. Any member making such disclosure shall then refrain from participating in the Board’s decision-making process relative to such matters.

Lax acknowledged the language of the bylaws of the DDA, which Jennifer Hall had cited in calling the point of order, but said that they needed to be read so that they were consistent with the state statute. He noted that members of the board can opt to recuse themselves if they so choose.

Hall asked, however, what contract was being referenced. Lax indicated that his understanding of the resolution related to an existing contract between the city and the DDA.

Hall pressed the point further by asking what contract the resolution was supposed to tie $2 million to. Lax indicated again that it was the parking agreement contract. “Where specifically does this resolution do that?” Hall asked.

Lax indicated that the preliminary paragraph makes a reference to the contract. From the draft resolution:

Whereas, In 1992 the DDA entered into a master agreement with the City to operate and maintain the public parking system for the benefit of the public, and this agreement is set to expire in 2015;

Whereas, This agreement set forward that the DDA was to provide the City with $10 million over the period of 2005 to 2015 as rent for the parking facilities, and the City elected to receive all these funds by 2010;

Hall countered that the agreement that’s referenced is a $10 million agreement stretching over 10 years, under which the DDA has already paid the city $10 million. So the DDA had fulfilled its end of that agreement, Hall concluded.

Hall noted that she saw nowhere in the agreement anything that indicated that the DDA board was at this time amending that agreement to provide the city with additional funds. She also pointed out that she saw nowhere that the city had requested the DDA to amend the agreement. She allowed that she understood that this is what the “whereas” clauses said. But she said she did not see how the “resolved” clauses achieved the amendment.

Lax indicated that his understanding was the intent of the resolution was to amend that agreement by supplying the additional funds.

Lax indicated that if there were language in the resolution that explicitly stated that it was an amendment to an agreement, it would make things more clear. At that point, Lowenstein weighed in, saying that the amendment that she had intended to propose would do exactly that.

John Splitt, the DDA board chair, declared that the board was ready to move on with the discussion. Lowenstein brought her two amendments forward, which she described as “very small.” One came in a “whereas” clause and the other in a “resolved” clause.

With Lowenstein’s amendments in italics, the resolution read as follows:

[...] Whereas, Representatives of City Council and DDA have held informal discussions in an unprecedented spirit of cooperation and have outlined some preliminary terms as a basis to amend the current agreement;

[...] RESOLVED, The DDA authorizes providing the City with this additional $2 million in fiscal year 2010/11 with the following expectations:

• The DDA and City representatives who have developed the preliminary terms will continue to meet at least once a month to complete work on an agreement that will go to the DDA and City Council for approval, and these meetings will be open to the public, but not subject to the Open Meetings Act.
• The DDA and City representatives will aim to conclude their work by October 31, 2010, but certainly no later than the end of the fiscal year 2010/11.
• The DDA will provide the City with $2 million by providing half on July 1, 2010 and the second half no later than January 1, 2011.

RESOLVED, With this resolution the DDA is amending its 2010/11 budget so that the $2 million shown as a contingency item in its 063 Parking Fund will now be an approved expense.

Deliberations then proceeded with Smith and Hieftje at the table.

Ethics: Conflict of Interest (Orr’s TARP Amendment)

When Keith Orr eventually weighed in on the $2 million subject, he suggested an amendment that again prompted Jennifer Hall to raise the question of a conflict of interest.

Orr said that in both public and private conversations he told people that he felt that these were “extraordinary times.” He said that extraordinary times required extraordinary actions. He also said that extraordinary times requires cooperation and rejected a “me first” mentality. He also reminded council members that he’d said many times that the “mutually beneficial” committee had been incorrectly named. That was unfortunate, he said, because words do matter.

Keith Orr makes his pitch for a TARP payment from the DDA to the city of Ann Arbor.

Instead of calling it a mutually beneficial committee, he said it should have been called “the committee for shared sacrifice.” [Orr had expressed that sentiment at the DDA board's March 3, 2010 meeting, when the board approved the DDA's budget for the year.] That sacrifice, he said, should be shared across members of the city council, city hall staff, downtown residents and businesses, and the DDA. All of these people had a need for a healthy city and a thriving downtown.

Orr called for a politics of solutions, not politics of blame – that, he said, they could leave to Congress. He said he was heartened to see that the discussions in the working group had been frank and fruitful and that the general area of agreement had been reached.

However, he cautioned, that the proposal before them that day was not an agreement. In his business, he continued, if he were to present it to his attorney for review, his attorney would advise not to sign it. Not because it’s a bad agreement, he continued, but rather because it was not an agreement at all.

Orr proposed a different way to move forward: The DDA would approve a Temporary Ann Arbor Relief Payment (TARP) of $1 million. [The proposal drew laughs because it has the same acronym for the federal "Troubled Asset Relief Program" – known as a bailout for the banking industry.]

Orr said that the relief payment would come with no strings, because there really is no agreement in place, but rather it would be a recognition of an extraordinary need. The acronym, Orr said, was meant not just to be amusing, but to emphasize that there is no meaningful agreement in place.

The grant simply recognizes that a healthy downtown requires a healthy city – shared sacrifice. The goal is a real agreement that can be comfortably signed by all parties, he said. There was a real possibility, he said of an additional payment of $1 million by Jan. 1, 2011. He said that he understood that the city budget process could mean that layoffs might be required if the entire $2 million were not promised at this time. He felt that this would provide an additional incentive to reach an actual agreement in a timely fashion – so that budgets can be amended and layoffs avoided.

Sandi Smith suggested a friendly amendment to Orr’s proposal, suggesting that the second $1 million be paid after Jan. 1, 2011 for DDA cash flow reasons. Hall indicated that she appreciated Orr’s attempt to make the resolution express what the board was actually doing, which is just giving money to the city.

But Hall then restated her earlier point of order, which was that if the amendment restated the resolution to make clear it was simply a grant for $1 million, the board was then in the territory of having two board members who had conflict of interest in discussing it. Based on legal counsel’s earlier advice, she said, she felt conflict of interest was again in play, because they were no longer talking about amending the parking agreement contract, but just awarding a grant.

Ethics: Conflict of Interest (Renewed Objection)

When Hall raised the point the second time, Sandi Smith indicated that she would abstain from any further discussion and left the table to take a seat in the back row the audience. Leah Gunn then suggested that the same wording that Lowenstein had earlier added be added to Orr’s amendment. That suggestion was not acted on, with Splitt asking Orr if making it a grant totally changed what they had been trying to propose.

After she recused herself, Sandi Smith took a seat in the back row of the audience. At left is Steve Bean, who’s chair of the city’s environmental commission and an independent candidate for mayor of the city of Ann Arbor.

Orr replied that it did change things. He said he loved the direction that things had been going with the discussions and that people had engaged in discussions in good faith. At that point, he said, they simply did not have an agreement. He was trying to find a solution so that the city did not have to lay off as many police officers, and that buys time to allow the DDA and the city to reach an agreement. He said he felt it had to be thought of as a grant.

John Hieftje said he would not be supporting the amendment, saying that he felt the framework had been well worked out by members of the DDA and members of the city council and that it had a lot of promise. He said he did not want to do anything that would upset the careful work that had been done.

Hall then pressed the point of order again, saying that she was sorry to have to do so. She stated that she did not think it was appropriate for someone on the receiving end of a grant to participate in the discussion about whether or not the grant should be given. She noted that there were many other examples in the history of the DDA board where board members had recused themselves. As a specific example, she gave Russ Collins having recused himself from the award of a grant to the Michigan Theater. [Collins is the executive director of the Michigan Theater.]

Hall then asked whether the DDA legal counsel, Jerry Lax, had a different opinion, given Orr’s amendment. Based on what he had said previously, Lax offered, a grant is “a different animal.” So, he characterized Smith’s recusal as “appropriate under the circumstances.”

Hieftje then indicated to Lax that he did not have the “luxury” of having one of the city attorneys there with him, but that the city attorney had that morning offered a different opinion than the one that Lax had given on his ability to participate. Hieftje indicated it was relevant that Orr’s motion was only being discussed as an amendment. He seemed to indicate that he did not know for certain whether his participation in the discussion was appropriate.

What Hieftje said he did know was that the mayor’s position is named in the state statute that enables the existence of the DDA. And going back to the previous statement by Lax, that his participation was allowable as long as the amendment was set in the context of a contractual agreement, the mayor pointed out that the contract was still referenced in the “whereas” clause.

After recusal, mayor John Hieftje took a seat in the audience between former DDA board member Bob Gillette and Adrian Iraola, of Park Avenue Consulting.

However, the mayor said he would be happy to honor Lax’s opinion on that particular amendment. Hieftje said he thought it was an issue that would require a great deal of conversation with attorneys, because it would affect cities across the state in terms of the precedent that could be set. Lax allowed that it would not be the first time that an issue required more discussion between attorneys than could have occurred between late yesterday afternoon and that day.

Hieftje then asked what Lax’s opinion was on the issue. Lax reiterated his view that Orr’s amendment was talking about a grant as opposed to a contract, and for that reason he thought it would be appropriate that Hieftje recuse himself. With that, Hieftje took a seat in the audience between former DDA board member, Bob Gillette, and Adrian Iraola, of Park Avenue Consulting.

When Orr’s amendment failed, Smith and Hieftje returned to the board table.

Ethics: Conflict of Interest (Questions for Further Analysis)

Lax indicated in his exchange with Hieftje that the conflict of interest issue could well generate more discussion among attorneys. Among the questions that could be discussed are the following:

• Does the state statute cited by Lax actually preempt the bylaws of a body like the DDA board?
• Does the DDA resolution actually achieve an amendment to an existing contract, or is it an illusory promise, something that a court cannot enforce?
• What are the implications of an illusory promise for -
  • (i) the conflict-of-interest issue, where Lax’s interpretation relied crucially on the contractual nature of the resolution?
  • (ii) the city’s ability to rely on the resolution in its budget planning?
  • (iii) the ability of the DDA to “get” anything from the city via its resolution?

Key $2 Million Issue: Contracts

Discussion of the “contractual” nature of the resolution, with respect to the DDA’s ability to “get” something from the city, surfaced in at least three ways:

• What does the DDA-city good faith agreement look like for the city, in the context of the city council, which is a body that is subject to political and electoral concerns?
• What was the history of past “broken promises”?
• How can the DDA enforce attendance at public meetings by city councilmembers and city staff as specified in the resolution?
• What is the benefit to the DDA that is offered by the resolution?

Contracts: On What Is Confidence in the “Agreement” Based?

In introducing his TARP amendment, which ultimately failed, Orr had pointed out that there was no actual agreement that they were voting on – that was why he had been in favor of calling it what it was – a relief payment to the city.

Others raised the same point about the lack of an actual agreement. During the discussion of the conflict of interest issue, Newcombe Clark raised the issue with the DDA’s legal counsel, Jerry Lax, of whether an amendment to the existing parking agreement could be achieved “proactively” in the absence of an agreement – the money was being given prior to any agreement, he said. Lax contended that there were several different stages involved, and an agreement can contemplate further amendments.

During the substantive deliberations on the issue, Gary Boren said that before the working group was formed, it was well known that he was opposed to the DDA “handing over” – but then Boren paused, saying he did not want to use charged language. He eschewed “handing over” in favor of “transferring” money as a blank check without any quid pro quo. He maintained that it was critical to the DDA’s existence that it gets a condition-based quid pro quo for any money that is given to the city.

At the meetings before the working group was formed, he said he remembered that the question had been put to him about whether he could support it. He said that knowing the devil was in the details, and if he had a crystal ball that told him all those details will be worked out and lived up to it, that he could support it. The working group then proceeded.

But to be frank, he said, he was concerned that those details had not been fleshed out. He said that he did not necessarily have a problem giving the city $2 million in exchange for a crystal ball that would tell him there would be a well fleshed-out, detailed contract.

He said he would support a motion to table the resolution, so that some of the procedural aspects could be straightened out, as well as getting some more meat in the details. “I really need to see more about what the devil looks like.” He also needed something better, he said, in terms of a commitment on the part of the city.

Boren said he could support something like the proposal that was before the board, but said that he just did not think they had a reliable partner in the city – not because of an integrity issue, but because of an inherent political and electoral issue. After November, Boren thought, they would have to start all over again because they would have a new city council. There was no way that the DDA board could bind Christopher Taylor and Margie Teall and Carsten Hohnke to vote a certain way without a contract. So if the resolution were not tabled, and they had to vote that day on it, Boren said, he would have to reluctantly vote no.

Newcombe Clark said he agreed with Boren that it was “putting the cart before the horse.” He also agreed that the board did not have the details. Clark said it was ironic that he favored much of what was being presented. However, Clark said, the DDA board was being asked to spend money without the details. The situation of who was on the city council could change after the August primary, Clark said. [Clark is considering a run for city council's Ward 5 seat, either as a Democrat or as an independent.]

Russ  Collins responded to the concerns of Clark and Boren about the composition of the city council by saying that they had asked city administrator Roger Fraser and DDA executive director Susan Pollay to attend the working group meetings because they wanted to make sure there was continuity outside of the political arena. Their inclusion was also motivated by a desire to make sure they were talking about things that were actually possible for implementation.

DDA board member Russ Collins exchanges waves with DDA legal counsel Jerry Lax. At left is board member Newcombe Clark.

Collins acknowledged that he also had been a member of the working group that had produced the term sheet that Hewitt introduced. He said he wanted to “totally echo” everything that Gary Boren had said. Boren had represented fairly the nature of the discussions and the history of the discussions as well as their tenor, Collins said.

He described himself as perhaps more of an optimist than Boren – at which chair John Splitt interjected “and less of a lawyer,” which drew laughs at the table and served to ease some, though likely not all, of the tension in the room. [Boren is an attorney.] Collins characterized the working group as people of good will and good faith who were trying to do something good for the city and for the DDA.

Late in deliberations, Hall returned to the point that there is no assurance in the resolution, as much as she wanted to believe that the mayor and councilmember Teall would be able to tie the $2 million to preventing police layoffs. That did not preclude some other councilmember from having some other resolution that they wanted to bring forward in a couple of weeks to tie the $2 million to something else. That is an issue for the council to deal with at the council table, she suggested. The DDA board was not buying anything, Hall concluded, except for a $2 million transfer to the city.

In her remarks, Joan Lowenstein said she wanted to address what the DDA gets in return for the $2 million. She noted she’d heard it called “sneaky and illegal.” She noted that it would actually be sneaky and illegal for any councilmember to promise a vote for a certain amount of money. So if anybody thought that people had promised certain votes in return for $2 million, that’s incorrect, because that would be illegal for a city councilmember to do.

Contracts: Past Broken Promises

When the parking agreement was negotiated in 2005, there was a conscious expectation on the part of the DDA that if the $10 million parking agreement was approved, the city council would approve the 3-Site Plan.

The 3-Site Plan was an effort in 2005 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 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.

In an April 28, 2010 email sent to all members of the current DDA board, plus current city councilmembers, former DDA board member Rene Greff wrote that in 2005 the DDA’s negotiating team saw a link between the parking deal and the 3-Site Plan:

But the council members on our committee cautioned that we couldn’t link the increased rent with the 3 site plan in writing because that would make it look like the DDA was bribing council for passage of the three site plan. And besides, we were all working in good faith and knew that the city was going to approve the 3 site plan.

At Wednesday’s board meeting, Sandi Smith supported the account of expectations not met back in 2005. The reason she was pleased with the working group’s current term sheet, she said, was that it was something in writing to go forward, which had not happened at the last negotiations in 2005. Because of the $10 million agreement, there had been promises made in 2005, Smith said, that were not in writing.

And that had caused some very hard feelings between the two organizations for some time, Smith said. There had been promises about the downtown beat cops remaining downtown, she said. She said there’d been promises made about certain things happening with respect to development of certain lots downtown – an allusion to the 3-Site Plan. Those promises had been made, Smith said, with a similar group of city council folks and DDA folks – but the only thing that got recorded was in the current parking agreement.

The other things, Smith said, “went by the wayside.” Smith said that she saw the term sheet as an opportunity to have talking points when the negotiations begin. She did not believe that up to this time any negotiation had occurred. The one thing that she had wanted to achieve, she said, was a dialogue on the idea that enforcement of parking rules should belong with the DDA. It had taken a year and a half, Smith said, for city staff to recognize and be willing to have that dialogue. That was something she had never given up on, Smith said – for enforcement of parking by the DDA to be expressed in writing and be on the table.

Gary Boren also corroborated Greff’s account. He said that given the history of the 3-Site Plan, it led him to be suspicious. The agents of the city, he said, had been genuine, and had been negotiating in good faith over the last few months. He did not believe there was any deception or intent on their part to get money from the DDA just by saying whatever they needed to say to get it. But due to the electoral and political concerns of councilmembers, plus the history of the 3-Site Plan, he had concerns about the DDA’s ability to make the city council live up to the agreement.

Almost in passing, mayor John Hieftje mentioned that there were “some people” who had a much different understanding of what went on with respect to the discussions around the previous agreement in 2005. If there were any promises made, he said, some people had a much different understanding of the nature of those promises than what had been represented at Wednesday’s board meeting.

Contracts: Commitment to Public Process

Jennifer Hall and Newcombe Clark questioned how the monthly public meetings that are specified in the board’s resolution could be enforced.

Hall cited the fact that expectations of the public process had not been met over the last year and a half. In perhaps the most spirited defense of open government The Chronicle has witnessed at a public meeting since its founding in September 2008, Hall laid out how the two committees of the DDA and the city had failed to meet expectations of public process.

Hall said there was an implicit understanding that there would be open discourse between the city and the DDA with respect to a $2 million mutually beneficial agreement, or a continuation of the parking agreement. At the very least, she said, there was an understanding on the board that the board itself would have an open discussion of the reasons for giving the city an additional $2 million.

Her understanding of the expected openness, Hall said, was based on several actions and statements. In January 2009, there was a resolution that the city council brought forward, asking for the DDA to begin discussions for a mutually beneficial financial agreement. Then in March of 2009, the DDA had established via a resolution a committee to conduct discussions with the city. The resolution had been supported by the entire board that had been present at the meeting.

Hall pointed out that at the same meeting when former board member Rene Greff had contended that the city had not communicated a clear message about the intent behind the $2 million, Hieftje had responded by saying that the process surrounding the $2 million had been completely open and that he had been on the record consistently as well.

In May of 2009, Hall continued, Hieftje had attributed the city’s failure to appoint a committee of its own to bad feelings about membership on the DDA’s committee – Greff and herself. On June 15, 2009 – after Hall had removed herself from the committee and Greff had resigned, knowing that she was not going to be reappointed to the DDA board – the city council appointed three members to a its mutually beneficial committee: Carsten Hohnke, Margie Teall, and Leigh Greden.

The appointment of those three members was confirmed on July 7, 2009. At every meeting from March 2009 until the present, the DDA has had a standing committee report on its agenda for a mutually beneficial committee. Since the time that the city council had seated their own committee, Hall continued, the DDA board had heard reports from Sandi Smith to the effect of “the committee has not met and there is nothing to report.” On one occasion she had reported that the committee had asked staff questions and were awaiting a report.

“Then, boom,” Hall said, “last Wednesday there’s a very detailed discussion about what it is worth giving $2 million for!” She was alluding to the operations committee meeting when the term sheet was introduced as a product of a “working group.” There had been a year and a half of continued commitment that the two committees would talk about this and that it would be an open process, Hall said.

There was an established framework and expectation by the DDA board, Hall said, that there was a committee with members chosen to represent the DDA in the $2 million discussions. There was an expectation that the committee would, at the very least, report that they had met and update the board on those discussions. Hall went on to point out that the city council has an expectation of its own committees that they are subject to the Open Meetings Act. Hall also emphasized that the DDA board had an expectation of its own committees that their meetings will be open and that at the very least board members would inform each other about what the nature of the discussions are.

“I don’t support this type of conduct. I find it sneaky and underhanded and corrupt, and possibly illegal, in violation of the public trust in our government.” Hall concluded that obviously not everyone was in agreement with her on this point because things would’ve happened in a different way if they had been. She offered her comments, though, so that board members would understand why she was so angry.

The lack of openness, Hall said, resulted in mistrust of the results that came out of the discussions.  “When we lose our trust, we get angry, and we call names, and we develop conspiracy theories, and it’s ugly – and as my grandmother would say, it’s not very ladylike – but that’s where we find ourselves today.”

Later in the meeting, Clark led off a line of inquiry by saying he meant to get to the idea of “us and us” – a notion that Joan Lowenstein had introduced in encouraging the board not to think of the DDA and the city as “us and them.” He asked, “Who is us?” Specifically, he asked, does the city currently have a mutually beneficial committee?

Hieftje replied that the committee had not been dissolved. Clark asked for confirmation that it did in fact currently exist. “As far as I know,” replied Hieftje. Smith said that the committee was “down one member.” [Leigh Greden, a city councilmember who was appointed to the council's committee, was defeated by Stephen Kunselman in the August 2009 primary.]

Clark pressed the question, “So, it is a standing committee?” Hieftje said it was different from committees that are set and that had existed for a long time – the mutually beneficial committee was created to work on a specific thing. He said he did not remember whether it “goes away.” Sandi Smith said she did not know the answer to that.

Citing language in the agreement –”The DDA and the city representatives who have developed the preliminary terms” – Clark asked whether that means that the DDA’s standing committee and the current members of the city committee are no longer going to be in charge of this going forward and only the people listed on the term sheet are to continue? Will the discussions happen under the pre-authorized behaviors and practices of how the DDA treats its committees?

Roger Hewitt indicated that based on the conversation at the operations committee, it would be treated like any other committee on the DDA. Hewitt indicated his view was that it would be the mutually beneficial committee’s work going forward.

Hall asked why it had not been done this way in the past. The assumption was, said Hall, that the DDA had a committee and that the city had a committee and that those committees would meet to work out a deal, and that they would be treated like any other committee and everyone would get invited to the meetings. She asked why it had not happened that way over the last year and a half.

Hewitt replied it was because the board had designated a committee to deal with it. Hall asked again why the meetings had not been made available and accessible to other board members. Hewitt indicated that he was not aware of any board member being barred from any meeting or who had made a request to be at any meeting. Hall responded by asking how they were supposed to know that they could attend a meeting, if they were never told that the meetings were taking place. “I hate to sound all snarky,” she said, but you can’t ask to be a part of a meeting that you don’t know is happening.

Hewitt countered by asking Hall if she’d inquired about when the meetings were going to be. Hall indicated that she had asked, after she had found out that a meeting was going to take place. And of the several people she had asked, Russ Collins had been the only one who was forthcoming with information – which she said she appreciated.

Clark came back to the point of whether there had in fact been a meeting of the mutually beneficial committee. Russ Collins said it was a meeting of the “working group.” Clark asked if the mutually beneficial committee was allowed to call working groups into existence and to invite whoever they wanted and to exclude others.

Russ Collins noted that Clark had explored the exact line of questioning at the operations committee meeting. Embedded in the language of the resolution, said Collins, was a very clear statement that because they would be actually negotiating terms, everything would be open to the public and available to DDA board members.

Hall allowed that she and Clark had been very annoying about the question of what was and was not a committee. But she noted that they were asking the entire board to trust that giving over the $2 million will be a starting point to going forward and working out an agreement. Her point was this: How could they trust that that would happen, when they had already had a certain amount of trust in the process up to this point, which had turned into something that they could not trust.

She returned to the fact that there was an understanding that there would be a relative openness. This did not mean, she said, that if she asked if there was a meeting, she would be told that there is a meeting so that she could be there. Openness means that you announce there is a meeting, and that at every board meeting when the committee is to report, there would be a report and that there would be an announcement of when the next committee meeting would be, she said. This did not happen, she stated. “You are asking for our trust, and I cannot give you my trust.” Hall allowed that she sounded even to herself like a broken record.

Collins noted that the resolved clause included language about meetings once a month going forward. And these meetings would be open to the public, he said. Hall told Collins said she understood that, but asked how she could believe that a different agreement would be not be worked out by a working group. Collins told Hall that Clark had brought forward that same concern aggressively and appropriately at the operations committee meeting and that the language in the “resolved” clause of the resolution about the monthly meetings happening publicly was the result of Clark’s concern.

Collins said he did not know what else could be done except to go back in time. Hall said she could not trust the process going forward even though it was clearly written in the resolution. Things had been clearly written in the past, she said.

Clark asked Sandi Smith if she or anyone else on the city council was planning to bring forward a resolution that would be worded similarly to a DDA’s resolution. Clark noted that they did not have the ability with their resolved clause to compel the city council representatives or the staff to attend any of the meetings. Previously, they’d had two corresponding resolutions establishing the mutually beneficial committees, and they were similarly worded, Clark noted.

Smith told Clark that she had not really thought about the mechanics of that. Without a council resolution, Clark said, there was nothing that compelled the city councilmembers or the city staff to attend the meetings described in the DDA’s resolution. Smith said she wanted to take some time to contemplate what he was asking.

Key $2 Million Issue: Organizational Identity

The comments of Roger Hewitt and Leah Gunn at Wednesday’s board meeting about the city’s 2002 decision to allow the DDA to collect parking meter revenues could be seen as an answer to the question: Whose $2 million is it, anyway? Their answer was clear – the city’s. But those comments also touched on a larger issue that board members discussed: What is the DDA’s relationship to the city and how does the city relate to the DDA’s mission?

Joan Lowenstein gave an emphatic defense of the idea that the DDA was a part of the overall organization of the city of Ann Arbor. She noted that the mission of the DDA is rather broad. For example, she said, part of the Ann Arbor DDA’s mission is affordable housing – it’s one of the four budget funds. But affordable housing is not listed in the DDA statute, she noted. Yet the Ann Arbor DDA had decided that that was going to be a part of their mission.

Lowenstein concluded that there were all kinds of things that the DDA could include in their mission of strengthening the downtown and attracting investment in the city. Bolstering the budget of the city in this kind of situation, which everyone agrees is dire, is within that mission, she concluded.

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.

Mayor John Hieftje said the idea that the DDA was somehow a separate organization, that it was somehow autonomous, went back to sometime in the mid-1990s. So he wanted to make the point that the city council had the ability to create DDAs with a simple six-vote majority and also had the ability to end DDAs with a simple six-vote  majority. It seemed to him that the DDA was indeed an “arm of the city” and should be stepping up and doing what they can to aid the city at a time of the worst financial crisis that they’ve have seen in their lifetimes.

Around a year ago at the March 1, 2009 Sunday night caucus, Hieftje had compared the DDA to the city’s planning commission:

As far as being “a part of the city of Ann Arbor,” Hieftje said the DDA was “no different from planning commission except that they had their own funding stream” – the tax increment financing (TIF) district.

Regarding the legal aspect of city council’s ability to dissolve DDAs, Boren said he’d heard it mentioned in passing or as a veiled threat, but he did not feel like that would be a slam dunk, legally. He allowed that he was not a municipal lawyer. [Boren is, however, an attorney.] Boren said he’d spoken to the DDA’s legal counsel about it, and he was not convinced that a DDA could be easily dissolved. He pointed to the 30-year plan that had been recently adopted, which had been accompanied by an extensive public process.

The state’s enabling act says that when the DDA has completed its mission, the city council shall disband it, Boren stated. It does not say that the city council can for any reason or for no reason disband the DDA. He said he hoped that to the extent that any of the discussion about whether the city could disband the DDA was supposed to be a veiled threat, he could defuse that threat.

Susan Pollay, executive director of the DDA, facilitated some introductions before the May 5 board meeting started.

Hieftje said he did not mean it to be a veiled threat at all, but was using it to illustrate the idea that the DDA was in fact a part of the city. He said there were people in the community who would like to end the DDA tomorrow and that he was constantly standing up against that. He said the DDA served a very useful function and he would not be in favor of disbanding it. But he just wanted to illustrate the fact that the DDA did serve at the pleasure of the city council.

It was a point that Hieftje had also chosen to make at the city council’s May 3, 2010 meeting as well – three days before – when Susan Pollay, executive director of the DDA, had appeared before the council to answer questions about DDA bylaws revisions.

Boren concluded the deliberations by making clear that in his remarks he had not meant to accuse the mayor of making a veiled threat.

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

Absent: John Mouat.

Next board meeting: Noon on Wednesday, June 2, 2010 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

A draft of the resolution with the recommendation was to be sent to all board members for review late Wednesday. If the full DDA board approves the resolution at its next meeting on May 5, city councilmembers who are up for re-election this year may not have to campaign under the shadow of police and firefighter layoffs. The $2 million from the DDA would allow the city council some flexibility in amending the FY 2011 city budget, before it is adopted at the council’s second meeting in May. That budget was formally introduced at the council’s April 19 meeting and showed a roughly $1.5 million deficit. It also included some police and firefighter layoffs.

But how much of the $2 million will be put towards avoiding layoffs versus offsetting the deficit is far from clear. Two city councilmembers attended the DDA operations committee meeting: Sandi Smith, who also serves on the DDA board; and Margie Teall, who serves on the council’s sub-committee appointed for the purpose of renegotiating the parking agreement between the city and the DDA. Last year, the city council and the DDA board each appointed a committee for the purpose of renegotiating that agreement.

At Wednesday’s meeting, Smith said it was not certain whether layoffs could be avoided with the $2 million payment or if so, how many could be avoided. Smith’s contention that there was no guarantee the $2 million would avert layoffs came in response to one of several sharp questions put to his fellow DDA board members by Newcombe Clark. Clark began the discussion by asking if the $2 million was tied to anything.

In the course of the discussion, it was made clear that the $2 million would be tied neither to a promise of no layoffs at the city, nor made contingent in any way on specific progress towards a renegotiation of the parking agreement between the DDA and the city.  It would also not be tied to the implementation of any part of a “term sheet” that will form the basis of the city-DDA discussions in the coming months.

Key aspects of that “term sheet” are the idea that regular payments will be made to the city, that the DDA will assume some responsibility for parking enforcement, and that the city will be “held harmless” in any revenue loss associated with cessation of its enforcement activities.

But by the end of the discussion, Clark had eked out a victory of sorts: a provision in the draft resolution that ties the $2 million to a public process, from this point forward, for the city-DDA negotiations. They have been going on a few months now out of public view. In that regard, the resolution can be fairly be analyzed as a fresh commitment to the committee structure, with its associated expectations of public process, that the two bodies had already adopted, but not implemented for discussing the parking agreement.

Background: The Parking Agreement of 2005

We begin with the basic background on the parking agreement between the city and the DDA, which was a $10 million deal struck in 2005, extending through 2015. It’s that deal that underpins the current discussion on the $2 million payment the DDA is now contemplating.

Since 1992, the DDA has administered the city’s parking system on properties owned or leased by the city of Ann Arbor. Set to expire in 2012, the agreement was extended in 2005 through 2015 – in light of the financial challenges the city faced in that year – to provide additional revenue to the city. In broad strokes, it was a $1 million-per-year deal, with the added wrinkle that the city could request up to $2 million from the DDA in any given year, provided the total over 10 years did not exceed $10 million. From the DDA board’s 2005 resolution:

Whereas, The City is facing a funding crisis and has asked the DDA to significantly increase its payments under this Agreement in order to help the City address this crisis;
Whereas, The City and the DDA agree that the DDA can afford this increase only if the City and DDA cooperate to increase revenues into the DDA;
Whereas, Both the City and the DDA agree that the DDA is a separate governmental entity that has a statutory responsibility to support and expand community values and services in the City’s downtown and near downtown neighborhoods;
[...]
3. Increase the annual rental fee paid to the City for use of City parking facilities to $1,000,000.00/year beginning with the 2005/06 fiscal year, for a total of $10,000,000.00 during the ten year period of the Agreement.
4. During the period of July 1, 2005 to June 30, 2015, provide the City the opportunity to draw an advance on future rent not to exceed one full year’s rent, thus providing for up to two year’s rent on any year. Any request by the City for pre-payment must be made to the DDA by December 1st of the preceding year so as to be included in the DDA’s annual budget.

The situation now confronting the city is one anticipated by DDA board member Rob Aldrich in 2005: What happens if the city requests $2 million each of the first five years? From the board minutes of the March 2, 2005 meeting:

Mr. Aldrich asked if it would be possible for the City to draw the full $10 million in the first 5 years; Mr. Solo said yes. Mr. Aldrich asked what would happen in year six, which is to say, would the City be satisfied to receive no further rent for the remaining five years. There was no response to this question.

In the city’s fiscal year terms, FY 2011 is “year six.” At that March 2, 2005 meeting, representing the city was councilmember Leigh Greden (Ward 3) who was filling in for mayor John Hieftje, who sits on the DDA board as mayor.

Other members of the DDA at the time were: Ron Dankert, Bob Gillett, Rene Greff, Roger Hewitt, John Hieftje, Sandi Smith, Dave Solo, Rob Aldrich, Fred Beal, Gary Boren, Dave DeVarti, Leah Gunn. Of those, remaining now in 2010 are Hewitt, Hieftje, Smith, Boren and Gunn.

Background: Foundations of Good and Bad Faith

Based on the March 2, 2005 DDA board meeting minutes, then-councilmember Leigh Greden, who was filling in for mayor John Hieftje at the board meeting, gave an assurance on the part of the city that it was not the intent to ask for $2 million beyond the first year of the agreement [emphasis added]:

Mr. Solo said that approving this resolution does not preclude renegotiations at any time, by either the City or the DDA. Mr. Greden commented that the City would have to agree to renegotiate in the future, and that it was important to note that it was not the intent of City Council to rely on this money more than to get them through the next few years. City Administration and Council have put in place short- and long-term strategies to solve the structural budget deficit, and have budgeted for $2 million only in the first year.

The fact that the city ultimately did request $2 million each of the first five years is one possible reason for a perception by some DDA board members of poor faith on the part of the city.

Another reason some DDA board members might perceive a historical lack of good faith on the city’s part can be traced to a DDA development plan for three different downtown parcels that was in the works back in 2005, in the same time frame as the parking agreement was renegotiated. It was known as the “3-Site Plan.”

The 3-Site Plan was an 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.

But instead of pursuing the 3-Site Plan in 2005, Ann Arbor’s city council opted to create a Greenway Taskforce to explore the possibility of incorporating the First & William lot into a greenway along the Allen Creek creekshed. And in July 2009, the city council passed a resolution  expressing the desire to see the lot become a park, when money for environmental cleanup could be identified. [Chronicle coverage "First & William to Become Greenway?"]

The First & Washington site now has an approved site plan for City Apartments – a combined residential/parking development by Village Green. Nothing has been built because of a lack of financing for the developer. Its site approval has been extended by the city administrator until June 30, 2010, after which additional city council action will be required to allow more time for the project to move forward. No similar progress has been made on the Kline’s lot.

The reporting of Tom Gantert of The Ann Arbor News during 2005 chronicles the struggle between supporters of a greenway and supporters of the 3-Site Plan, which was championed by the DDA, through the better part of the year. [Ann Arbor News archives from 2003 until it closed last year are available from the Ann Arbor District Library's online research portal.]

The friction that year between greenway and 3-Site Plan supporters was reflected in friction between DDA board members and city councilmembers, as well as between the city’s planning commission and the city council. At the time, mayor John Hieftje was accused of trying to prevent the city’s planning commission from holding its own public hearing on the matter, in part by preventing CTN coverage of their planned hearing.

The attitude of some at the DDA towards the idea of decoupling the First & William parcel from the 3-Site Plan was essentially that it would be better to start from scratch: From a June 28, 2005 Ann Arbor News article by Gantert:

[DDA executive director Susan] Pollay did show the DDA’s commitment to its plan when she said was asked about “unhitching” First and William from the proposal.

“Unhitching a piece of it?” Pollay asked, repeating the question. “You may as well start afresh.”

Hieftje said that was the first time he’d heard Pollay say it’d be better to scrap the plan than break up what has been pitched as a “three-site plan.”

But by the end of 2005, a 2-Site Plan compromise had evolved. It involved development just of the Kline’s lot and the First & Washington lot.

Do some at the DDA have lingering ill feelings because the outcome of the political process didn’t go their way on the 3-Site Plan? Yes – but it’s about more than a lost political battle.

It’s the fact that when the parking agreement was negotiated in 2005, there was a conscious expectation on the part of the DDA that if the $10 million parking agreement was approved, the city council would approve the 3-Site Plan. In an April 28, 2010 email sent to all members of the current DDA board, plus current city councilmembers, former DDA board member Rene Greff put in writing what she’d told The Chronicle a couple weeks earlier in a telephone interview. [Though she no longer serves on the DDA board, Greff attended Wednesday's operations committee meeting.]

Specifically, Greff writes that in 2005 the DDA’s negotiating team saw a link between the parking deal and the 3-Site Plan:

But the council members on our committee cautioned that we couldn’t link the increased rent with the 3 site plan in writing because that would make it look like the DDA was bribing council for passage of the three site plan. And besides, we were all working in good faith and knew that the city was going to approve the 3 site plan.

But those 2005 negotiations were conducted out of public view. Greff told The Chronicle that numbers of councilmembers and DDA board members present were consciously chosen to be fewer than a quorum to avoid Open Meetings Act requirements, and that the committee had chosen meeting locations to avoid being discovered by Gantert. In her April 28, 2010 email, Greff calls the meetings “clandestine.”

In her phone interview with The Chronicle, Greff allowed that she’d been complicit in keeping the meetings out of public view. She said that as a relatively new member of the DDA board, she’d relied on Leigh Greden’s assurance that “this is how things are done,” with things worked out in private before they’re made public.

The lesson she drew, she said, was that to protect the interests of the DDA, keeping the process public was important.

Committees, Expectations of Public Process

Although the process that began in January 2009 to renegotiate the parking agreement between the city and the DDA began with the expectation of a public process, up to now it has been shielded from public view. And Wednesday’s operations committee found DDA board members attributing that shielding to the lingering hurt feelings from 2005.

How did the renegotiation process start? It can be traced to the fact that the city of Ann Arbor plans in two-year financial cycles, even though it adopts budgets one year at a time. Back in January 2009, councilmember Sandi Smith (Ward 1) noticed that for the FY 2011 plan, which was the second year in the 2010-11 two-year cycle, the city had “penciled in” a $2 million payment from the DDA – despite the fact that the existing parking agreement did not require such a payment.

Smith brought forward a resolution to the city council, which it passed, asking the DDA to begin a discussion. The DDA responded by appointing a committee tasked to negotiate the parking agreement with a corresponding committee of the city council. The council was not swift in appointing its own committee, with some councilmembers expressing reservations about the membership on the DDA’s committee.

At Wednesday’s operations committee meeting, DDA board member Newcombe Clark observed that for 15-months, the city council had been unwilling to engage in dialog, partly because they didn’t like who would be sitting across the table from them.

Russ Collins responded to Clark, contending that he did not know that was the case, saying he had not heard that or read that, allowing that perhaps he should read other things.

Reading a timeline overview of the relevant history, which summarizes material The Chronicle has published twice previously, confirms Clark’s claim [See Chronicle coverage: "Parking Report Portends DDA-City Tension" and "DDA Retreat: Who's On the Committee?"]:

• Jan. 20, 2009: City council passes a resolution asking the DDA to begin discussions of renegotiating the parking agreement between the city and the DDA in a mutually beneficial way.
• March 4, 2009: DDA board establishes a “mutually beneficial” committee to begin discussions of the parking agreement between the city and the DDA. On the committee: Roger Hewitt, Gary Boren, Jennifer S. Hall, and Rene Greff. The DDA’s resolution establishing their committee calls on the city council to form its own committee.
• May 20, 2009: During the mid-year DDA retreat, mayor John Hieftje states publicly that city councilmembers object to the membership of Jennifer S. Hall and Rene Greff on the DDA’s “mutually beneficial” committee.
• June 3, 2009: DDA board chair Jennifer S. Hall removes herself from DDA’s “mutually beneficial” committee, replacing herself with Russ Collins.
• June 15, 2009: Mayor John Hieftje nominates councilmembers Margie Teall (Ward 4), Leigh Greden (Ward 3) and Carsten Hohnke (Ward 5) to serve on the city council’s “mutually beneficial” committee, and they’re confirmed at the city council’s July 20 meeting.
• July 1, 2009: DDA board chair Jennifer S. Hall appoints Sandi Smith to replace outgoing DDA board member Rene Greff (whose position is filled with Newcombe Clark) on the DDA’s “mutually beneficial” committee. Smith is also a city councilmember, representing Ward 1.
• August 2009: Leigh Greden is defeated in the Democratic primary by Stephen Kunselman.
• August-December 2009: Sandi Smith, the chair of the DDA’s “mutually beneficial” committee, reports at each monthly DDA board meeting that there is nothing new to report.
• Dec. 5, 2009: Dissolution of the DDA is included in an “everything is on the table” list for discussion at the city council’s budget retreat.
• January-April 2010: Roger Hewitt reports at monthly DDA board meetings that only informal discussions are taking place.

As The Chronicle has reported previously, the expectation that the two committees would meet publicly rests on a 1991 city council resolution stipulating that even sub-committees of public bodies that do not constitute a quorum are expected, to the best of their abilities, to conform with the Open Meetings Act:

R-642-11-91

RESOLUTION REGARDING OPEN MEETINGS FOR CITY
COMMITTEES, COMMISSIONS, BOARDS AND TASK FORCES

Whereas, The City Council desires that all meetings of City boards, task forces, commissions and committees conform to the spirit of the Open Meetings Act;

RESOLVED, That all City boards, task forces, commissions, committees and their subcommittees hold their meetings open to the public to the best of their abilities in the spirit of Section 3 of the Open Meetings Act; and

RESOLVED, That closed meetings of such bodies be held only under situations where a closed meeting would be authorized in the spirit of the Open Meetings Act.

Expectations of Public Process Not Met

No meetings of their respective “mutually beneficial” committees have ever been acknowledged by either the city council or the DDA board at any of those bodies’ regular meetings. However, starting in early January of this year, members of the committees – with the addition of councilmember Christopher Taylor, who was not appointed as part of the council’s committee – began the work of renegotiating the parking agreement in the guise of a “working group.” From the “term sheet” memo that was circulated at Wednesday’s operations committee meeting:

MEMORANDUM
To: DDA Board
From: Gary Boren
Russ Collins
Roger Hewitt
Carsten Hohnke
Sandi Smith
Christopher Taylor
Margie Teall
CC: Roger Fraser
Susan Pollay
Re: City of Ann Arbor – DDA Operations
Date: April 28, 2010

In conversations beginning after the New Year, Roger Hewitt approached a number of us in order to discuss additional areas of possible cooperation and resource allocation between the DDA and the City of Ann Arbor. As a result of these conversations, this working group formed to sketch the framework of what could be a new relationship between the DDA and the City. That general framework is described below.

The term “working group” in this context was first encountered by The Chronicle in conversation with Christopher Taylor, when he arrived on the third floor of the Larcom Building on Friday afternoon, April 16 to attend a meeting of the “working group.” Taylor seemed visibly surprised to see The Chronicle waiting there. We had learned of the scheduled meeting the previous Wednesday, when Russ Collins mentioned it at the DDA board’s partnerships committee meeting.

Asked if he was also there to attend the meeting of the “mutually beneficial” committees, Taylor rejected the idea that the committees were going to meet, saying that it was “more of a working group.” He’d been asked to participate by Roger Hewitt, Taylor said.

As The Chronicle previously reported, city administrator Roger Fraser then refused to allow The Chronicle to attend. In barring The Chronicle from the meeting, Fraser rejected the applicability of the 1991 council resolution that requires the meetings of city sub-committees to comply with the Open Meetings Act, contending it was not a sub-committee of the council that was meeting.

Present in addition to Fraser were six others: Susan Pollay, executive director of the DDA; DDA board members Roger Hewitt, Sandi Smith and Russ Collins – all members of the DDA’s committee established to discuss the parking deal; and city councilmembers Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). Hohnke is on the council’s committee, while Taylor is not. Missing from the DDA’s “mutually beneficial” committee at the meeting was Gary Boren.

In rejecting the applicability of the 1991 resolution, Fraser may have been relying on the idea that Smith, Taylor and Hohnke – though a committee-like subset of councilmembers that were part of a “working group” –  did not constitute the appointed sub-committee of the council. The DDA’s committee, however, had three of its four members present, constituting a quorum of its members.

Following Wednesday’s DDA operations committee meeting, Sandi Smith told The Chronicle that a meeting that included the city’s committee did take place in the fall of 2009. However, that meeting didn’t go anywhere, she said, attributing it to Leigh Greden’s defeat in the August primary.

The work of producing the “term sheet,” Smith said, was accomplished largely through rotating one-to-one meetings, not group meetings. In explaining why the process had been kept out of the public view up to that point, Smith echoed a sentiment that Russ Collins had expressed during the meeting, when he said that the parties needed the initial privacy to get to a place where they could have a dialogue – otherwise they’d just be throwing spitballs across the table, Collins said. Collins described the “term sheet”  as a “beachhead” for communication, and the conversation needs to unfold now publicly.

Hearing the phrase “beachhead” from Collins more than once prompted Smith to kid him: “Define that for me, Russ.”

In her post-meeting conversation with The Chronicle, Smith attributed that initial barrier to communication between the city and the DDA to a “culture clash” and lingering resentment about the failure of the city council to approve the 3-Site Plan back in 2005.

Why the DDA Operations Committee Met

To set the context of Wednesday’s DDA operations committee meeting, where the recommendation to pay $2 million to the city of Ann Arbor was discussed, it’s worth reflecting on why the committee met.

The short answer is that the operations committee of the DDA always meets on the last Wednesday of the month, which works out to be the week before the meeting of the full board.

The topic of the $2 million payment may have turned up on the operations committee’s agenda in any case. But the thing that virtually guaranteed it would be discussed on Wednesday was a conversation at the end of the partnerships committee meeting two weeks earlier.

At that meeting, Newcombe Clark had questioned why the partnerships committee had not considered  a resolution to bring before the full board on the $2 million question. He noted that timing of the city’s budget process – adoption by the city council before the end of May – meant that the full DDA board would need to vote at its next monthly meeting  (May 5) on converting the $2 million contingency in the DDA’s budget to a payment to the city.

At the partnerships committee meeting, Clark questioned whether the resolution could be brought to the board without recommendation by a DDA board committee. And when it was suggested that the “mutually beneficial” committee could make the recommendation to the full board, Clark questioned whether it could do that as an ad hoc committee.

At issue was adherence to the DDA bylaws. The city of Ann Arbor’s need for the $2 million could be analyzed as a “request for funding” under the DDA bylaws:

Section 10 – Requests for Funding. The Board may not act upon a request for funding unless the request has been referred to a committee of the Board for review and recommendation. In the event that a committee has not made a recommendation to the Board within 60 days from the time that the request was first presented to the Board, the Board may, by majority vote, bring the proposal to the Board for consideration without benefit of the committee recommendation.

[Approval of amendments to the DDA bylaws, which have been approved by the DDA board, are on the city council agenda for its May 3 meeting. Section 10 does not contain any proposed revisions.]

At the partnerships committee meeting, the issue was settled when Clark asked for and received from the rest of the partnerships committee an assurance that there would be at least a seven-day notice of any resolution on the $2 million question. Said Clark: “I think that it’s reasonable to have seven days notice before we have an item that’s going to make the board meeting crazy.”

The seven-day assurance meant that the last opportunity for a standing committee to review the $2 million resolution before the May 5 board meeting was at the operations committee meeting.

What’s Tied to the $2 Million, If Anything?

Deliberations at the operations committee meeting began with the distribution of the “term sheet.” Several minutes went by as those who were seeing the document for the first time read through the text. It features in most significant part the idea of unifying the administration of the parking program and the enforcement of parking fines with a single entity – the DDA. That’s consistent with The Chronicle’s previous analysis of the DDA’s recent parking plan as an implicit pitch by the DDA to the city to assume responsibility for enforcement of parking rules downtown. [Chronicle coverage: "Parking Report Portends City-DDA Tension"]

The “term sheet” envisions signing an actual contract by Oct. 31, 2010, which is just before the general election in the fall.

DDA board member Russ Collins called the “term sheet” document a “beachhead” that was established to begin a dialog, one that members of the DDA’s mutually beneficial committee felt would ultimately be fruitful and beneficial. At that point, Newcombe Clark sought to clarify if the idea was to pay the $2 million because of the start to the dialog.

If it was something else besides the start to the dialog that was to result in the $2 million payment, Clark wanted to know what that was. If there was nothing else, he wanted to know what the urgency was about the timing. Collins answered that it had to do with the timing of the city’ budget cycle. Clark observed that the current city budget as proposed by the city administrator, if enacted, would include layoffs. So he asked if the idea was to make the $2 million payment in order to guarantee no layoffs.

Sandi Smith, speaking from the perspective of a city councilmember, indicated that the outcome of the community conversation over the next two weeks would affect whether there are layoffs or not – it was unsure whether the $2 million would avert layoffs, and if so, how many, she said.

If the $2 million was to be paid just because the city was now talking to the DDA, wondered Clark, what would happen in November if no progress had been made towards working out the contract?

Smith allowed that there was “an element of faith” involved. Margie Teall, who represents Ward 4 on the city council and who was also present at the table for Wednesday’s DDA operations committee meeting, indicated that the faith was based on more than just the fact that there is a great conversation going on. There was an intent, said Teall, to keep working on the plan.

Collins noted that one reason it had been important to involve the staff of the city and the DDA in the process was to ensure the continuity of work on the plan. And the idea, said Collins, was to establish a longer-term, multi-year contract – something echoed by Hewitt.

Clark then picked up the contrast between the staffs of the two organizations and the members of the two public bodies. Clark noted that there are three people involved on the city’s side who might no longer be involved after the Democratic primary election, held in August. He meant Teall, Smith, and Carsten Hohnke, all of whom will face primary challenges. [Christopher Taylor does not currently face a primary challenge; however, the deadline to submit petitions is not until May 11.] In that context, Clark wondered if there would be follow-through from new councilmembers replacing those who could potentially lose. Speaking to Smith and Teall, Clark said: “I trust your ability to follow through on these agreements, because you are there. But if you are not there …”

Clark himself has taken out petitions to run as a Ward 5 candidate, challenging Hohnke for his seat. It’s a point to which Clark would eventually return as the discussion unfolded to focus on the nature of the future meetings that would be held between representatives of the DDA and the city. Clark secured an assurance that those meetings could be attended by anyone on the DDA board, “even if we don’t like certain people or even if certain people are running against certain people.”

As Russ Collins clarified, the DDA’s working practice for the committee in the future would be consistent with the way that the DDA’s committees work in general. In particular, DDA committee meetings are noticed, open to the public and open to any DDA board member, whether they’re a member of the committee or not.

Before the operations committee reached a point of committing to a public process from this point forward, Clark floated a different idea: staggering out the payments to the city. He suggested a contingent payment schedule of, for example, $100,000 a month based on the city’s ongoing good faith efforts to negotiate the details of the contract. He went as far as to say the conversation could end right then if everyone agreed that the city would get the $2 million only on a contingent, staggered basis – that would satisfy his concerns.

Teall rejected the idea of a contingent payment, as did Smith, Leah Gunn and Hewitt, saying that the city could not budget based on that kind of contingency.

Clark then changed tack slightly, pointing out that the good faith discussions up to that point had been accessible to only some of the DDA board members and not to the public. Clark expressed his concern that the city would opt to have discussions only when they want to, and it would be closed, it wouldn’t be announced, some people would be invited, some people wouldn’t. Concluded Clark, “That is a ridiculous way to talk in good faith, in my mind.” He pitched the idea that the meetings should be open.

As the conversation seemed to stall, Collins told Clark that he sensed there was nothing that could be said to allow Clark to get past his anxiety about the $2 million. As examples of what would help him get past his anxiety, Clark then appealed to the two specific suggestions he’d made: (i) to make the $2 million payment in a contingent, staggered fashion; and (ii) to make the meetings open and public.

Collins indicated that he didn’t think anyone had a problem with future meetings being public. Teall echoed that sentiment. Clark declared that for $2 million he’d be willing to buy 12 above-board meetings that are held publicly and that will take the DDA and the city toward an agreement. Collins said he thought there was no problem with that at all. Replied Clark: “I think that there has been a big problem up to this point.”

The operations committee eventually set about sketching the language of the resolution that it would bring before the full board. Collins noted that nobody had brought a resolution to the meeting and that it had depended on the dialog of the committee. Gunn focused the committee’s attention on two “resolved” clauses that needed to be written – one to allocate the $2 million and one to establish the monthly meetings. [.txt file of the draft resolution circulated later that evening by Susan Pollay, executive director of the DDA].

The resolved clauses from the draft resolution:

RESOLVED, The DDA authorizes providing the City with $2 million in fiscal year 2010/11 with the following expectations:

• The DDA and City representatives who have developed the preliminary terms will continue to meet at least once a month to complete work on an agreement that will go to the DDA and City Council for approval, and these meetings will be open to the public, but not subject to the Open Meetings Act.
• The DDA and City representatives will aim to conclude their work by October 31, 2010, but certainly no later than the end of the fiscal year 2010/11.
• The DDA will provide the City with $2 million by providing half on July 1, 2010 and the second half no later than January 1, 2011.

The DDA’s tie of the $2 million to the public process in that draft does not bind the city council to the public meetings beyond the expectation expressed in the 1991 resolution.

Coda: Beat Cops

As the operations committee discussion of the $2 million resolution wound down, Newcombe Clark brought up the issue of downtown beat cops.

By way of background, as a part of the FY 2010 budget process – which involved early retirement incentives for police officers – dedicated downtown beat patrols were eliminated in favor of an approach where police officers would spend their “out-of-the-car” time walking downtown. Officers are supposed to spend an hour out of the car for each shift anyway, and the change was to ask them to spend it downtown. Previously, there’d been dedicated patrols for downtown – often done by bicycle-mounted police officers.

Back in 2005, besides the expectation that the city council would approve the 3-Site Plan, there was an expectation that the beat patrols downtown would also be preserved – if the DDA accepted the $10 million parking agreement. From Greff’s April 28, 2010 email cited earlier:

Just so the record is clear this journey began in 2004 when the City threatened the DDA with beat officer layoffs if we did not provide financial assistance. [...]

We would increase our rent to the City by $1 million a year. The City would not have to lay off any beat cops, and the City would pass the DDA’s 3 site plan which would add to the DDA TIF capture and ensure that we could afford to make the increased payments to the city without raising parking rates or foregoing our other priorities.

At the operations committee meeting, Clark asked whether discussing the question of downtown beat patrols was considered to be inconsistent with good faith for the future conversation of the “term sheet.” He’d been told recently at the city staff level that it was counter to good faith, and said that he’d been denied some information he needed to formulate a proposal on downtown beat patrols. Clark was assured that it was not counter to good faith, and when asked by Clark, Teall indicated that she’d weigh in with city staff to get Clark the numbers he needed.

The resolution that Clark may bring to the full board next week would call for the DDA to begin reserving $60,000 a month to fund beat patrols. Initially, the money would be sourced from the $335,000 already allocated by the DDA for the north-south Howell-Ann Arbor commuter rail project (WALLY). As the resolution draft notes, the rail project has shown little progress.

The DDA board talked about more than just the budget. Who was that map man? As the nameplate says, it's DDA board member Keith Orr, who was introducing a draft of a bicycle map that the DDA is working on. (Photos by the writer).

Deliberations covered a range of issues. First, the budget needs to accommodate two major DDA capital projects: the underground parking garage currently under construction; and the Fifth Avenue and Division Street improvements, which are also underway.

Second, there’s a contingency written into the budget for $2 million. The contingency is there in case renegotiation of the parking agreement between the city and the DDA results in a continuation of the $2 million payments made by the DDA to the city for each of the last five years. Continuation of the payments is not legally required under terms of the current agreement, which assigns responsibility for administration of the city’s parking system to the DDA through 2015.

Third, the fund balances of the DDA – which reflect the DDA’s reserves – face a dramatic reduction. That’s an issue that city of Ann Arbor CFO Tom Crawford flagged back in the spring of 2009 during discussions about the construction of the underground parking garage. The concern caused the city council to scale back the size of the garage by 100 parking spaces.

And finally, decisions made by the DDA board over the last year have resulted in re-direction of revenues from two surface parking lots – 415 W. Washington and the old YMCA lot at Fifth and William – to the city of Ann Arbor. That has resulted in the elimination of line items for DDA programs for next year that were in this year’s budget.

Besides the budget, the board also discussed a number of other topics, including development of the Library Lot and results from two parking surveys.

We begin with background on the four funds that make up the DDA budget, and a discussion of reserve levels.

DDA Budget: The Four Funds

The DDA’s budget is divided into four funds: TIF (tax-increment finance), housing, parking, and parking maintenance.

DDA Budget: TIF Fund

Desposits to the TIF fund come from property taxes collected within the DDA district. It’s a tax-increment finance (TIF) district, which means that property taxes are collected on the difference between the baseline value of a property when the district was established and the value of a property after improvements. The Ann Arbor DDA TIF “capture” is on the value of the improvements at the point they are made, and does not include subsequent increases in property value due purely to market forces.

To illustrate how TIF works, consider a property that has a taxable value of $100,000 to start. Suppose the owner builds on the property so that its taxable value is $1,000,000. That $900,000 increment is the amount on which the DDA’s tax capture is based. Now suppose the property adds value at $10,000 a year for 10 years due to ordinary real estate market conditions. So after a decade, it has a taxable value of $1,100,000. Each year, the Ann Arbor DDA’s tax capture is based on the same $900,000. So in the 10th year, the basis of the DDA’s tax capture would not include the first $100,000 or the $100,000 by which the property had increased over the years.

DDA Budget: Housing Fund

The housing fund gets its deposits through transfers from the TIF fund. It was created in 1997, and historically the amount of the annual transfer has been $200,000. At the board’s February 2010 meeting, Sandi Smith summarized activity in the housing fund over the last decade:

Smith reported that in the last 10 years, 23 grants had been awarded and that the average amount of those grants had been around $80,000. Of the 23 grants, 11 had gone to one nonprofit – Avalon Housing. A total of $1.1 million from the housing fund had been obligated, Smith said. The breakdown of those dollars: (i) $400,000 for Village Green’s City Apartments project at First & Washington, contingent on issuance of a certificate of occupancy; (ii) $207,000 for the third year of a grant to Avalon; and (iii) $400,000 to $500,000 for Near North.

The Village Green project Smith mentioned in that summary is a planned unit development (PUD) proposal by Village Green Residential Properties LLC at the corner of First and Washington, across from the Blind Pig, which includes 156 dwelling units and 244 public parking spaces. The city council approved the project on Dec. 1, 2008.

At its May 18, 2009 meeting, the council authorized an extension of terms in order to give Village Green more time to arrange financing. From the cover memo accompanying the resolution:

In order to complete this project the Developer has requested an extension of the term of the Option Agreement until December 30, 2009. Staff recommends approving this extension plus authorization for two three-month extensions at the City Administrator’s discretion. We expect this amendment to provide the developer sufficient time to complete their financing arrangements and close on the sale of the property.

The extension is now covered under the first of the three-month extensions that can be made at the city administrator’s discretion. The city has already factored $3 million of proceeds from the land sale into its financing plan for the new municipal center under construction at Fifth and Huron.

If the City Apartments project were not to go forward, the $400,000 in the DDA housing fund that’s committed to the the project would be freed up, along with the projected $9 million it would take to build the parking deck component of the project.

DDA Budget: Parking Fund

The parking fund gets its deposits from the city’s parking system, which the DDA administers under an agreement with the city. The agreement was revised most recently in 2005, extending 10 years, through 2015. The DDA contracts out the management of the system to Republic Parking. The terms of the city-DDA agreement on parking provide for a $1 million payment by the DDA to the city per year, including an option for the city to ask for up to $2 million in any given year – with the condition that the total amount of payments through 10 years not exceed $10 million.

Rob Aldrich, who was a DDA board member in 2005 when the parking agreement was struck, raised a concern about the possibility that the city would ask for $2 million in each of the first five years of the agreement. From the board minutes of the March 2, 2005 meeting:

Mr. Aldrich asked if it would be possible for the City to draw the full $10 million in the first 5 years; Mr. Solo said yes. Mr. Aldrich asked what would happen in year six, which is to say, would the City be satisfied to receive no further rent for the remaining five years. There was no response to this question.

As it turns out, the city asked for and received $2 million from the DDA for the first five years covered by the agreement. The current status of the negotiations between the city and the DDA to revise the parking agreement has been an ongoing topic for the last year at DDA board meetings, and factored significantly into deliberations on the DDA budget on Wednesday.

DDA Budget: Parking Maintenance Fund

The parking maintenance fund gets its deposits through transfers from the parking fund. The amount of those deposits per year is based on an inspection of the parking structures by an engineering firm, which estimates required maintenance over the next 20 years. That includes fixing rips in protective coatings, and repair of cracks to prevent seepage.

DDA Budget: Fund Balances (Reserves)

The DDA’s 2010-11 budget shows total fund balances dropping from $8,865,473 at the start of the year to $3,414,486 by the end. At Wednesday’s meeting, Roger Hewitt, who chairs the operations committee, attributed the bulk of the drop to down payments on two major capital projects: the underground parking garage at the Library Lot site, and the Fifth and Division streetscape improvements, which are both now underway.

In the 2010-11 budget, those expenditures are listed under “capital costs” in the amount of $2,796,507 from the parking fund and $2,020,753 from the TIF fund.

The DDA 10-year plan forecasts reserve levels dropping to their lowest point of $1,130,000 in the 2012-13 budget year, which is 5.65% of annual recurring expenses. After that, they’re projected to increase, as the new parking spaces being built start to generate revenue and rate increases begin to take effect.

The appropriate level of reserves for the DDA budget was a topic that drove city council discussion when the underground parking garage was approved last year, and ultimately led to the elimination of 100 spaces from the design.

From the Feb. 17, 2009 Ann Arbor city council meeting:

Crawford reported that on looking at the DDA’s financial picture, he noticed that they don’t have a minimum reserve policy. He said he generally used 15-20% as a minimum reserve. In light of the need to maintain adequate reserves, he said that in his view the project is “not affordable with the plans they have.”

The proposed structure would occupy area under Fifth Avenue. But [councilmember Carsten] Hohnke expressed concern that the cost of an extension along Fifth Avenue southward past the southern edge of the library lot all the way to William Street (part of the current plans) didn’t offer commensurate value for the investment. He was concerned that the cost would constrain the DDA in making other needed investments. He said that while there’s no doubt more space is required, he thought that the roughly 770 spaces to be built exceeded what’s required.

Hohnke then proposed an amendment that would slightly reduce the scope of the project, by whittling around 100 spaces off the total through eliminating the Fifth Avenue extension all the way to William Street. Even the reduced number of spaces would represent roughly a 10% increase in the 5,000 spaces currently in the city’s off-street parking inventory, Hohnke said.

Queried by Mayor John Hieftje, Hohnke said that cost savings of removing the 100 spaces would be around $6 million.

At the time, DDA board members were reluctant to accept Crawford’s assessment of appropriate reserve levels – reasoning in part that the city itself had no set policy specifying a reserve amount at that level. From The Chronicle’s coverage of the DDA board’s March 4, 2009 meeting:

[DDA board member, Leah] Gunn recounted how at council’s Feb. 17 meeting Tom Crawford, Ann Arbor’s chief financial officer, had expressed concern about the DDA’s fund balances. She said that the city of Ann Arbor had no policy on fund balances and that she thought the DDA’s finances were perfectly healthy.

However, on the fund balance issue, then-councilmember Leigh Greden wrote in an email sent on March 7, 2009 to Susan Pollay, executive director of the DDA, as well as to DDA board members Jennifer S. Hall and Leah Gunn:

I understand there has been some discussion at the DDA that the City does not have a minimum reserve policy similar to the one Tom Crawford has been recommending for the DDA. In fact, the City DOES have a minimum reserve policy, and has had such a policy – in writing – for years. The policy has been printed in the City’s Budget for years, and reads as follows:

The City shall “maintain an undesignated General Fund balance with a minimum range of 8% to 12%; provided that when necessary use of these funds occurs, subsequent budgets will be planned for additions to fund balance to maintain this standard over a rolling five-year average.”

Tom Crawford has repeatedly urged the City to exceed this policy by maintaining an undesignated General Fund reserve of 15%. Consistent with Tom’s recommendations, the City has exceeded our policy by maintaining an undesignated General Fund reserve of 15-20%. The existence of this policy and our success in exceeding the policy is one of the reasons that TWO ratings agencies upgraded the City’s bond ratings in late 2008. These higher bond ratings result in lower interest rates for bonds issued for City projects – including DDA projects. This is the background for Tom Crawford’s request that the DDA adopt a similar policy requiring a fund balance of 15%.

The policy that Greden cited is No. 7 on a list of 10 short-term financial goals in the city’s FY 2010 budget book.

Budget Discussion

With that background, then, here’s how the budget deliberations unfolded. The topic was broached first during public commentary.

Budget Discussion: Public Comment

Brad Mikus addressed the board about the proposed 2010-11 budget and noted several concerns that led him to conclude that “it’s a tight budget.” Among those concerns was a budgeted total revenue of over $16 million for the parking system, when revenues over the last 12 months had been only $14 million. In addition, Mikus pointed out that the budget relied on an increase in tax-increment finance (TIF) district revenues from $3.54 million to nearly $3.8 million, or by 7%. He told the board that it appeared the budget would only be met if things “worked out exactly right.” He thus encouraged the board over the next 12-18 months to look closely at the actual revenues as they came in.

Board Budget Deliberations: Part 1

Hewitt led off by noting the budgeted drop in fund balance from $8,865,473 at the start of the year to $3,414,486 was due to the two major capital projects started this year: the underground parking garage at the Library Lot and the Fifth and Division streetscape improvements. In the 2010-11 budget, those expenditures are listed under “capital costs” in the amount of $2,796,507 from the parking fund and $2,020,753 from the TIF fund.

Responding to Mikus on the question of TIF  and parking revenue, Hewitt said that the TIF estimates came from the city of Ann Arbor. The increase in parking revenues, Hewitt said, would come as a result of a rate increase that will go into effect on July 1, 2010. [Those increases are part of a series of already-approved incremented rate increases that started in July 2009 and will ultimately see hourly rates in parking structures of $1.10 by 2012.]

Hewitt described how the total reserves over the next three years would be relatively low, reaching their low point in 2012-13. That low is based on the projections of the 10-year plan putting the total fund balance at $1.13 million  – a number that does not include the housing fund balance. After that low in 2012-13, the 10-year projections show total fund balances (minus the housing fund balance) of $2.8 million in 2013-14, $4.5 million in 2014-15, and $10 million in 2015-16. [The housing fund balance is not considered available for other use and is thus not counted in the reserve.]

Hewitt noted that they would be cutting back on some programs, given the “relative tightness” of the fund balances. First, he said, for the next year and possibly for the next two years, transfers to the housing fund out of the TIF fund would be reduced from $200,000 to $100,000. The balances in the housing fund, said Hewitt, would be made up following that three-year period.

The housing fund balance, observed Hewitt, would be about $1.3 million, even with the reduced transfer. Hewitt also observed that historically, the DDA had found it difficult to find places to invest housing fund dollars. Board member Russ Collins noted that it was a way of being “prudent with funds,” as Brad Mikus had suggested during public commentary.

Sandi Smith, a board member who also represents Ward 1 on city council, objected to the strategy on the grounds that there was no mechanism for ensuring that the housing fund balances would be restored as Hewitt had described. She suggested a separate resolution laying out how that would happen. She noted that most of the money in the housing fund was already encumbered in different ways, even though it hadn’t been spent. The unencumbered fund balance, said Smith, was only $200,000. She allowed that it had been difficult to find ways to spend housing fund dollars, but said that it was also important to restore it.

Board member Leah Gunn weighed in, saying that the board could always restore the funding if there were a project where it was needed, if someone brought a proposal to the board. The next couple of years, however, they would need to be “on a diet” in terms of spending discretionary income. For the next couple of years, though, Gunn said she felt it should stay the way it was – reduced to $100,000.

Hewitt, picking up on Smith’s point about the housing funds being encumbered, said that around $400,000 of that was encumbered by Village Green’s City Apartments project at First & Washington, which had no clear indication of when it would be started or completed – the housing fund payment will not be required until certificates of occupancy are issued. Hewitt felt like the board would be past the tight period by the time that $400,000 would need to be paid.

Responding to a query from board member Newcombe Clark via speaker phone, Hewitt said that the DDA’s responsibility was to pay for a 250-space parking structure that will be built on the bottom floors – $9 million upon certificate of occupancy. Hewitt said that for budgeting purposes that money would be needed 2.5 years from now – the time it would take if it were to start immediately.

Besides the $100,000 reductions in the housing fund transfer, other programs would be reduced, said Hewitt, including: Phase II of the energy grant program would be reduced from $250,000 to $0; grants to the four merchant associations would be reduced from $75,000 to $0; travel to the International Downtown Association conference would be reduced by $15,000.

Board member Jennifer S. Hall asked whether those items had been assumed to remain constant, when the DDA board approved the budget for the underground parking garage.

The conversation with Hewitt and Russ Collins yielded some uncertainty about what had been forecast in conjunction with the parking garage, but Hall returned to the idea that promises had been made about what would remain constant. What was it that had changed, she asked, that had resulted in the reductions?

Joe Morehouse, deputy director of the DDA, allowed that one unexpected shift in revenue had been from the 415 W. Washington parking lot, as well as revenues from the old YMCA lot at Fifth and William. [The city council requested and received approval from the DDA board to direct net revenues from those lots to the city. The council's action on 415 W. Washington came at its June 15, 2009 meeting, and action on the Fifth and William lot came at its Dec. 21, 2009 meeting. The ballpark numbers for revenues to the city from those two lots are $100,000 from the Fifth and William lot and $70,000 from the 415 W. Washington lot.]

Hall characterized the DDA’s actions, agreeing to direct those additional revenues to the city, as confirming it “after they asked for it.” She stressed that she wanted everyone to understand why the DDA board was forced to reduce its programs in the coming year.

For her part, Sandi Smith said that the energy grant and the housing fund reductions gave her pause. The $350,000, she said, did not make that big of a difference. She said she did understand that if a proposal came up, money could be moved into the housing fund. With respect to the energy grants, however, she felt it was an essential program. She noted that for Phase II of the program last year, the program had required only $58,000. [Phase I is an energy audit phase, while Phase II is implementation of recommendations from the audit.] Fifteen buildings had installed $138,000 worth of improvements – of which the DDA had paid just $58,000 – which would save $25,000 a year, she said. She emphasized that it was “direct dollars stimulating private investment in the downtown,” and that was core to the mission of the DDA. For that reason, she said, she was reluctant to see that disappear.

Board Budget Deliberations: Restoration of Phase II Energy Grants

Smith thus moved a resolution to restore $100,000 for Phase II of the energy grant program. The motion was seconded by Keith Orr. Weighing in by speaker phone, Newcombe Clark seemed to be in favor of putting all the funds back, including the merchant association allocations. Clark pointed out in the interest of full disclosure that he was no longer president of Main Street Area Association board.

John Mouat drew out from Hewitt the fact that concern for the minimum fund balance had driven the decision, and that all areas of the budget had been examined.

Orr weighed in for reductions in amounts as opposed to outright elimination of the items from the budget. He agreed with Smith that the energy grants were part of the DDA’s  core mission. He also acknowledged his ongoing association with Kerrytown District Association, which is one of the merchant associations that the DDA has historically funded.

Leah Gunn noted that the $9 million for the parking deck in connection with Village Green’s City Apartments project would not be spent for a very long time, as well as the $400,000 for the affordable housing grant. Hewitt cautioned that tomorrow they could announce that they’re going “full blast” and the DDA would need to meet those commitments.

Russ Collins said he supported his partnerships committee co-chair 100% – that’s Sandi Smith. From a practical point of view, said Collins, the DDA could make good use of the energy grant money. On procedural grounds, Collins objected to the fact that the operations committee had effectively made a policy decision on behalf of the partnerships committee. A reduction would have had a budget impact, Collins said, but the elimination amounted to a policy impact. About seeing the budget, Collin said, “It’s terrible to be surprised, and that’s a surprise.” Collins characterized adding another $100,000 to the deficit is “not extremely imprudent.” But picking up on Gunn’s comment, he said that assuming the $9 million won’t be spent was imprudent.

Collins allowed that the elimination of funds supporting the merchant associations had received a lot of discussion over the years, so the elimination of those didn’t bother him at all. He didn’t want to be “looped into” the sentiments in favor of keeping financial support for the merchant associations.

Jennifer S. Hall said she supported Smith’s amendment, but wanted to contemplate another one that would restore the other funds after voting on Smith’s proposal.

Mouat returned the conversation to the fund balance, expressed as a percentage of annual recurring operating expenses. Hewitt said the city wanted to see 15%, while Morehouse said he was looking to preserve 5%.

Smith echoed Collins’ sentiments that there could have been better communication from the operations committee. Board chair John Splitt clarified that when the operations committee had discussed the energy grants, they’d talked  about whether the money would actually be spent. They did not feel it would affect what would happen “on the ground,” Splitt said. At that point, Gunn called the question.

Outcome: The amendment to restore $100,000 to Phase II energy grants was approved, with Clark and Hewitt dissenting.

Board Budget Deliberations: Reduction of $2 million Contingency for the City

In following up on the intention she’d expressed to bring an additional amendment forward, Jennifer S. Hall proposed that the $2 million budgeted as a contingency for the city of Ann Arbor should be reduced to $1.65 million, with the balance of $350,000 allocated to the DDA programs that had been slated for elimination. The amendment was seconded by Newcombe Clark.

Hall noted that Joe Morehouse had indicated the change in the financial picture necessitating those eliminations had been the re-direction of parking lot revenues – from 415 W. Washington and Fifth and William – to the city of Ann Arbor. The $2 million contingency was there, she said, in order to accommodate a revenue request from the city. The revenue from those parking lots, she said, should be credited towards that $2 million.

Russ Collins cautioned that just because a line item has existed in a budget in the past does not mean it should exist in the future. Collins noted that the DDA’s “mutually beneficial” committee was in a good faith process with some good work already done, and that the resolution, he felt, would undermine that work. Leah Gunn told Collins that she did not want to see the negotiating position of the “mutually beneficial” committee weakened.

Hall recounted how the DDA had made a good faith effort to negotiate and how the city council had not followed up.  From a December 2009 Chronicle article: “City-DDA Parking Deal Possible“:

• Jan. 20, 2009: City council passes a resolution asking the DDA to begin discussions of renegotiating the parking agreement between the city and the DDA in a mutually beneficial way.
• March 4, 2009: DDA board establishes a “mutually beneficial” committee to begin discussions of the parking agreement between the city and the DDA. On the committee: Roger Hewitt, Gary Boren, Jennifer S. Hall, and Rene Greff. The DDA’s resolution establishing their committee calls on the city council to form its own committee.
• May 20, 2009: During the mid-year DDA retreat, mayor John Hieftje states publicly that city councilmembers object to Jennifer S. Hall and Rene Greff’s membership on the DDA’s “mutually beneficial” committee.
• June 3, 2009: DDA board chair Jennifer S. Hall removes herself from DDA’s “mutually beneficial” committee, replacing herself with Russ Collins.
• June 15, 2009: Mayor John Hieftje nominates councilmembers Margie Teall (Ward 4), Leigh Greden (Ward 3) and Carsten Hohnke (Ward 5) to serve on the city council’s “mutually beneficial” committee, and they’re confirmed at the city council’s July 20 meeting.
• July 1, 2009: DDA board chair Jennifer S. Hall appoints Sandi Smith to replace outgoing DDA board member Rene Greff (whose position is filled with Newcombe Clark) on the DDA’s “mutually beneficial” committee. Smith is also a city councilmember, representing Ward 1.
• August-December 2009: Sandi Smith, the chair of the DDA’s “mutually beneficial” committee, reports at each monthly DDA board meeting that there is nothing new to report.
• Dec. 5, 2009: Dissolution of the DDA is included in an “everything is on the table” list for discussion at the city council’s budget retreat.

Her position all along, said Hall, was that the arrangement needed to be mutually beneficial.

For his part, Clark noted that the contingency was simply there as a tool. “We’re not removing anything. It’s arbitrary.” Clark said he was not going to be in favor of cutting programs until the board understood exactly what the city was requesting: “It needs to be off the table until it’s on the table.”

Joan Lowenstein noted that the $2 million is not an arbitrary amount – it is the amount that has been paid under the parking agreement for the last five years. Lowenstein rejected Hall’s contention that the revenues from the 415 W. Washington and Fifth and William lots should count towards the $2 million, saying that those were”separate pools” and not a part of the same negotiation. Separate decisions were made on a separate basis, she said. The resolution, Lowenstein feared, would show that the DDA board was trying to “play games” with the city council.

Gary Boren, who also serves on the DDA’s “mutually beneficial” committee, said he was sympathetic to Russ Collins’ point of view about the resolution potentially undermining the committee’s work. However, it hurt the DDA when they had to cut programs that were working, he said. Boren noted that the DDA did not need to back off of the $2 million, but that the resolution would make clear to the city council that “this will take some skin out of us.”

Gunn expressed disappointment that the merchant associations did not report back about how they’d spent their money. Keith Orr responded by noting that a representative from the Kerrytown District Association had addressed the DDA board [at its Feb. 3, 2010 meeting] on that subject. Orr also suggested that the idea of “mutual benefit” could be replaced by “mutual sacrifice.”

Smith said she appreciated the spirit of the resolution, noting that the window display contest money was an example of a small amount of dollars that could go a long way.

Russ Collins called the question.

Outcome: Hall’s resolution to reduce the $2 million contingency by $350,000 failed, getting support only from Hall, Clark, and Boren.

Overall outcome: The budget was approved with support from Boren, Collins, Gunn, Hewitt, Lowenstein, Mouat, and Orr. Voting against it were: Hall, Clark, Smith, and Splitt.

Development Issues

The DDA board meeting included a variety of issues related to new development in the downtown area.

Library Lot

In August of 2009, the city of Ann Arbor issued an RFP for development proposals for the top of an underground parking garage currently under construction on the city-owned Library Lot, between Fifth Avenue and Division Street just north of the Ann Arbor District Library. At its Wednesday meeting, the DDA board got updates on construction and planning for the top of the structure.

Reporting out from the capital improvements committee, John Splitt gave an update on the construction of the underground parking structure along Fifth Avenue. Earth retention preparation work was nearly complete on the “dogleg” – the section of the lot abutting Division Street. [The work consists in part of drilling large holes deep into the ground and inserting steel beams into those holes.] That means people will start to see “real digging” as soon as next week, Splitt said. [As of Thursday, March 4, digging in earnest seems to have commenced, based on Chronicle observation.]

Bid package #3, Splitt reported, which is for the concrete and steel work, would be opened publicly at 2 p.m. in DDA offices the following day. [The bids will first be reviewed for numerical accuracy. Then any conditions specified by the contractors checked, and interviews will be held with the lowest three bidders to review the scope of work – a meeting for that is scheduled on Tues., March 9.]

In his report out from the Downtown Citizens Advisory Council, Ray Detter said that the DCAC opposed the placement of a large park on top of the Library Lot, where the underground parking garage is being constructed. [The two open space proposals submitted in response to the city's RFP have since been set aside for further consideration by the committee: "Two Library Lot Proposals Eliminated"] The DCAC did, however, support the idea of taking the next two years to plan that entire area of the downtown, said Detter.

Reporting out from the Library Lot RFP review committee, John Splitt said that Ann Arbor city administrator Roger Fraser had not yet hired a consultant who would be examining the financial aspects connected with the two proposals that are being given further consideration by the committee.

Sandi Smith noted that the RFP schedule was designed so that if a decision were made to move ahead with a particular proposal for development, changes in the design of the underground structure could be undertaken. She noted that the window of opportunity seemed to have been missed by now, and wondered if that did not perhaps remove some of the timing pressure to get to a decision. Susan Pollay, executive director of the DDA, confirmed that the parking garage was “on its way” now as designed. However, she pointed out that the design teams of the two remaining proposals under consideration were very familiar with the underground parking garage design, and that they would be able to accommodate their projects to its design.

Jennifer S. Hall inquired about the possibility that the extra supports designed into the underground garage – so that something could be built on the top of the underground garage – could be stripped out. [Proposers of a public gathering space, the Ann Arbor Community Commons, have called for such a strategy in order to free up money to pay for implementation of their commons.] Pollay told Hall that stripping out those supports would actually entail re-engineering the design of the garage and would, in fact, add cost.

Zingerman’s Expansion

In his report out from the Downtown Citizens Advisory Council, Ray Detter called the board’s attention to a public participation meeting for a proposed expansion of Zingerman’s Deli operations scheduled for March 8 at the deli, 422 Detroit St., starting at 5 p.m. Zingerman’s plan generated “heated discussion” at DCAC, said Detter. The deli is located in the Old Fourth Ward historic district. He said they agreed that Zingerman’s is an essential part of the community, but that they needed to make sure there’s not a precedent set that would undermine planning. The decision needed to be oriented around the city’s planning documents: the downtown plan, the central area plan, and the historic district.

Downtown Zoning and Design Guidelines

In remarks made at the end of the meeting during a time allotted to bring up other DDA business matters, Roger Hewitt expressed some frustration about the city council’s appointment of a task force charged with the responsibility of establishing design guidelines for downtown zoning. By way of background, Hewitt had served on the A2D2 steering committee that oversaw a years-long rezoning process, along with city councilmember Marcia Higgins, and Evan Pratt, of the planning commission.

City council ultimately approved the downtown zoning amendments, but did not enact the design guidelines, pending completion of a design guideline package that would include some kind of mandatory process with voluntary compliance. [See Chronicle coverage: "Downtown Planning Process Forges Ahead: New zoning approved, design guides will take longer"]

At the February 2010 DDA board meeting, Hewitt’s remarks showed that he had not been kept apprised of the fact that the A2D2 committee had been dissolved, after the city council had approved the rezoning component but before the design guidelines were completed:

In reporting out from the A2D2 oversight committee on which he serves, Roger Hewitt stated that the last meeting had been canceled and so he had nothing to report.

Later in the meeting, John Hieftje told Hewitt that the A2D2 oversight committee had actually been dissolved. This seemed to come as news to Hewitt, who said simply, “Oh!”

Said Hewitt about the design guidelines: “Apparently we’re going to revisit the entire process.” He noted that there was no representation from the DDA on the design guidelines task force, even though it would have a “profound impact” on the downtown area. Russ Collins wondered how that might be best addressed. Hewitt responded with humor, suggesting that he might talk to any councilmembers that Collins might know, who might be sitting next to him – the allusion was to Sandi Smith, who serves on the city council, representing Ward 1, in addition to serving on the DDA board. Smith and Collins co-chair the DDA partnerships committee.

In his report out from the Downtown Citizens Advisory Council earlier in the meeting, Detter said that they were glad to see the city council appointment of a task force to look at the design guidelines that will accompany the A2D2 rezoning of the downtown. That task force would be led by councilmember Marcia Higgins, he said, with Wendy Rampson (the city’s head of planning), Kevin McDonald (senior assistant city attorney), Kirk Westphal (planning commissioner), as well as Norm Tyler, Peter Pollack, and Tamara Burns. Detter said that out of the task force’s work they expected to get a system of required compliance with a process, including a review by a design board, and voluntary compliance with the outcome of that process.

Parking Surveys

Roger Hewitt reported on two surveys – one conducted online as part of the DDA’s effort to gauge public opinion about parking issues in preparation of a report it will make to the city council in April.

Online Parking Survey: Principles and Implementation

The online survey ran for 10 days between Feb. 9, 2010 and Feb. 19, 2010 and received 1,283 responses. Of those respondents, 73% reported being Ann Arbor residents, while 27% reported being non-residents. Almost an equal number of residents – 41% and 40%, respectively – reported being 51-71 years old and 31-50 years old.

Hewitt said there was “strong alignment” with the basic principles the DDA used, but more divided opinion about the specific implementation of those principles. For example, there was a 17-17 split between positive and negative comments on the investment in the underground parking structure. And support for some specific policies depended on respondents’ use of parking services: 59% of parking permit holders supported improving bicycling infrastructure, while low-frequency parkers supported it at an 81% rate.

Of the 54 respondents who weighed in on extended evening meter hours, 85% wanted evening parking to remain free. About the new e-park system, 61 respondents commented on the machines, and the written summary indicates that frustration was expressed about the “speed of the machines, screen visibility and reduced convenience and ease.”

On-Street Parking Survey: e-park

A second, on-street survey described by Hewitt at Wednesday’s meeting targeted e-park users specifically. Users of e-park stations on State, Liberty, Detroit, and Main streets were surveyed between Feb. 19 and Feb. 25 – 95 people responded. Hewitt characterized those responses to the survey as “pretty overwhelming” on the positive side, with 91.4% of respondents characterizing the machines as very easy, easy, or somewhat easy to use.

Hewitt also mentioned that paying by phone was not described by respondents as useful, perhaps because many of them indicated that they did not know it was an option. Hewitt suggested that some marketing work could be done on that. [.pdf of e-park survey results]

How useful are the following e-park features:
                                                   Don't Know,  Response
                    Very useful Useful Not useful  Never Used   Count           

Pay by credit card    61.1%     29.5%     0.0%       9.5%        95
Pay with coin         38.7%     53.8%     1.1%       6.5%        93
Add time at any epark 57.0%     24.7%     4.3%      14.0%        93
Pay by cell phone     20.4%     10.8%     8.6%      60.2%        93

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Other Business

The board heard a number of other reports and comments.

Wireless Washtenaw

Reporting out from the partnerships committee, Sandi Smith told the board they’d received a presentation on Wireless Washtenaw from Tom Crawford, the city of Ann Arbor’s CFO. Smith said that Crawford had explained that the priority for the rollout of wireless high-speed Internet access had been in rural areas, where there was currently no access at all. [James McFarlane, who manages Washtenaw County's information technology operations, gave county commissioners an update recently on the status of the Wireless Washtenaw project.]

Smith also reported that Crawford had told them about another possibility for wireless access. There’s potential that the bandwidth made available by TV stations previously used to broadcast an analog signal could eventually be available for wireless Internet connectivity.

DDA Board Retreat

Roger Hewitt announced that the DDA retreat had been scheduled for March 16 with the gathering for lunch starting around “noonish.” The retreat will be held at the offices of Bodman LLP in Suite 400 at 201 S. Division. One main topic of the retreat will be urban versus suburban identity, as well as the comprehensive parking plan.

Sandwich Sign Boards

Reporting out from the transportation committee, Keith Orr gave an update on the status of the sandwich sign board ordinance that the city council had considered, which would have made the signs legal, but put a permitting system in place. Susan Pollay, executive director of the DDA, had appeared before the council at its Feb. 16, 2010 meeting to ask the council to adopt the new ordinance, minus the permitting system:

Also during the public hearing, Susan Pollay, executive director of the Downtown Development Authority, read a brief statement on behalf of the DDA, saying that sandwich board signs are part of what makes for a vibrant downtown experience. She suggested that the system be adopted without permits and then reviewed after one year to determine if there was adequate compliance.

Orr reported that the city council had voted down the ordinance – which Sandi Smith then stressed meant only the demise of the current attempt to make the sandwich boards legal and to regulate them somehow. The fact that the sandwich sign boards remain illegal was, said Orr, “perhaps not the desired result.” Russ Collins kidded Orr as to whether he was recommending that merchants commit acts of civil disobedience.

Bicycle Hoop Requests, Maps

Reporting out from the transportation committee, Orr called attention to a feature on the DDA website that allowed people to request installation of bicycle hoops. He also indicated that DDA intern Amber Miller was working on a bicycle map for downtown.

Downtown Citizens Advisory Council

Ray Detter gave his report from the Downtown Citizens Advisory Council, which meets the evening before the DDA board holds its regular Wednesday noon meeting. [The majority of Detter's comments during his update are reflected in previous parts of this meeting report.]

He said that DDA board member (and Ann Arbor city council member) Sandi Smith had attended the meeting. The DCAC had covered a number of topics, Detter said, including efforts to improve maintenance and safety at Courthouse Square – a housing complex for seniors at the southwest corner of Huron and Fourth Avenue. Detter told the board that the DCAC continued to support the DDA’s efforts at transportation demand management.

Present: Gary Boren, Newcombe Clark (via phone), Jennifer S. Hall, Roger Hewitt, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: John Hieftje.

Board retreat and next regular board meeting: A retreat will be held on Tuesday, March 16 at the offices of Bodman LLP, Suite 400, 201 S. Division, starting at noon. The next regular board meeting is at noon on Wednesday, April 7, 2010, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

That conversational exchange is unlikely to occur when a proposed parking customer service phone line goes live. The plan for the phone service was conveyed to the Downtown Development Authority’s operations committee by DDA deputy director, Joe Morehouse, at the committee’s meeting this past Wednesday.

But it’s exactly the back-and-forth that unfolded between board chair Jennifer Hall and board member Russ Collins during the operations committee meeting. The seeming exasperation conveyed by Collins came well into a discussion that had started before his arrival at the meeting.

Before Collins arrived, Hall and operations committee chair Roger Hewitt had already been at odds over how the DDA should respond to a recent request from Ann Arbor city council. Hewitt: “In all due respect, Jennifer, you haven’t been to very many of these operations committee meetings, and I’ve been doing this for years, and for you to tell me how to do parking demand management …” Hall: ” … I’m not trying to tell you how to do it!”

What was it about the council’s most recent request that provoked the energetic back-and-forth among DDA board members? And what was it about a prior council request that had led to what Hewitt called at Wednesday’s committee meeting “a shouting match” between him and a councilmember?

Request One from City Council: Start Discussions on the Parking Agreement

We begin with that prior council request.

As reported in The Chronicle from city council’s Jan. 20, 2009 meeting:

A second item involved a call for the DDA to begin discussions of the parking agreement on metered parking between the DDA and the city. The word “discussions” was a replacement for “negotiations” in the original wording. It was approved.

At the subsequent Feb. 4, 2009 meeting of the full DDA board, their discussion of city council’s request was reported this way in The Chronicle:

“We don’t know where those discussions will lead,” said Hewitt. To which Gunn quipped, “Yes, we do!” Hewitt continued wryly, “Lacking such information at this time …” The future discussions with the city, said Hewitt, made it important to record a contingency in the 2010-11 budget. [Mayor John] Hieftje, for his part, said that he thought Hewitt’s “ability to forecast the future” was probably “right on.”

Board chair Hall took pains to emphasize that the contingency was “a placeholder.” The amount should not be perceived by anyone, said Hall, as reflecting a final, done deal, but rather a starting place for the discussion.

[The original lease agreement between the city and the DDA to operate the parking system dates back to 1992. It was renewed in 2002, and adjusted in 2005 to increase DDA payments to the city. As one "whereas" clause put it in 2005, the rationale for the increase was "The City is facing a funding crisis and has asked the DDA to significantly increase its payments under this Agreement in order to help the City address this crisis."]

The budget contingency discussed by the DDA reflected a possible revision to the parking lease agreement to the tune of $2 million. That is, under the possible revision, the DDA would transfer $2 million to the city, which under the current unrevised agreement would remain with the DDA.

A key fact confirmed at the operations committee meeting by councilmember Sandi Smith, who also serves on the DDA board: At city council’s budget retreat in January, the projections for the city’s finances were based on an assumption that the $2 million would be transferred from the DDA to the city.

Request Two  from City Council:  Show Us Your Financial Plan

The second request to the DDA from city council, which also came in the form of a resolution, was passed at council’s last meeting on Feb. 17. The context for the topic of the request – assurances of adequate reserves in the DDA fund balances – was the Fifth Avenue underground parking garage, for which council authorized the issuance of bonds at the Feb. 17 meeting. At that meeting, Tom Crawford, chief financial officer for the city of Ann Arbor, provided his assessment that the DDA needed to maintain reserves of 15-20%, and in that context, the project was not affordable.   The text of the unanimously-passed council resolution:

Whereas, The City has fiduciary responsibility for any bonds issued for Downtown Development Authority (“DDA”) projects; and

Whereas, The City Council is committed to working with the DDA to ensure its financial stability;

RESOLVED, That the City Council requests that the DDA provide the City Council, within thirty (30) days, a financial plan to increase revenue and/or defer projects to ensure adequate contingencies and fund balances for fiscal years 2010 and 2011, and that the proposals may include, but are not limited to, (1) prompt implementation of a demand-based pricing system for parking facilities, (2) increases in fees for “bagging” parking meters, and/or (3) deferring scheduled capital projects.

Further context for the request by council that the DDA lay out its plan to ensure adequate reserves is provided by the exchange between councilmember Sabra Briere and Crawford at the Feb. 17 council meeting, which The Chronicle reported this way:

Briere continued her questions with Crawford.

Q: Would the DDA be able to build the underground parking garage and make bond payments if they didn’t raise parking fees?

Crawford didn’t mince words: “No.”

Q: Is the plan before us – even cut down by $6 million – within reach of currently available funding?

Even with the reduced size, said Crawford, it’s still really unaffordable, but it’s within reach for the DDA to explore other options.

Asked by Briere as a followup to that, if the DDA would need to raise parking rates even further, replied Crawford: “That would be up to the DDA.”

Operations Committee Discussion of the Two Requests

With respect to the more recent request by council for the DDA to lay out a plan to increase revenue to maintain adequate fund balances, Roger Hewitt made it plain at the outset of the committee meeting that he did not feel it was appropriate to offer council the response that the fund balances were, in fact, adequate and that “everything is fine.” That, said Hewitt, would be like the DDA board thumbing its nose at council. Hewitt stressed that, “Thumbing our nose at them is not an appropriate response.”

In the wording of the parking fee increases, already submitted to city council, Hewitt saw the opportunity to address the specific suggestion from council in their resolution: “… prompt implementation of a demand-based pricing system for parking facilities.” Hewitt described the wording in the parking rate increase proposal as “vague,” noting that this vagueness worked to the DDA’s advantage. The language he described as vague reads as follows:

After much discussion over several months, at its February 2009 monthly meeting, the DDA voted to recommend parking rate increases shown below which upon consultation with City Council may be used by the DDA as an average amount [emphasis added] across the parking system.

Hewitt contended that an “average” could be computed in myriad ways, and that the DDA had not committed to any particular understanding of the “average,” so that it represented an area of flexibility. Especially with the imminent rollout of the new E-Park stations, Hewitt saw an opportunity to increase rates at high-demand metered spaces, which he felt would not be met with much objection, because most parkers would not even notice the increase. [The E-Park stations are wirelessly-connected payment kiosks that allow different rates to be set for different geographic areas and different times of day and to be easily adjusted.] The fact that the E-Park stations will accept credit cards would also reduce the probability that people would notice and decrease any resistance to the increase, suggested Hewitt.

Sandi Smith was not convinced people would not notice an increase from, say, $1 to $1.40. Susan Pollay, executive director of the DDA, warned that some people would notice and that the increase would be analyzed as “caused by the machine.” She also cautioned that talking about raising rates “sounds easy to do in this room, but outside this room,  you’re going to hear about it.”

Hall was not concerned with the raising of rates per se. She pointed out that she had opposed delaying the proposed rate increase. [Hall was joined by Hieftje in voting against the two-month delay until July 2009.] What she was concerned about was the apparent attempt, she said, to increase revenue under the guise of parking demand management.  Increasing revenue, she said, was not the point of parking demand management. Increasing rates in one area would need to be coupled with a decrease in rates in another area, she said, in order for the mathematics of “average” to work out.

Hall wanted the board to be clear about the message it was sending in its response to city council. If the DDA board was going to contemplate raising parking rates further, then there needed to be clear communication to council and to the public about the reason. Without  the $2 million transfer from the DDA to the city, Hall contended, the DDA actually would have reserves that met Crawford’s criteria. She was therefore resistant to implementing a concrete policy (further parking rate increases) based on a specific request (for $2 million) that had not yet been given concrete form. In this, she reiterated at the operations committee meeting the same sentiment she’d expressed at the last full board meeting: the DDA board should not accept the $2 million payment as a done deal. She objected multiple times during deliberations to treating it as such.

Collins responded to Hall’s desire for concreteness by saying that if they waited in every case for things to become concrete, the DDA would always be behind. It was important, he stressed, to have a practical strategy in place to deal with what was fairly apparent would happen – pointing to the mayor’s comments at the previous board meeting saying that the $2 million sounded about right as an amount that would emerge from discussions of the parking agreement.

Hall still lamented the fact that the mechanism that led them to that day’s policy discussion had been based on interactions at the level of one individual to another (city staff or councilmember to individual DDA board members – a possible allusion to Hewitt’s self-described shouting match) as opposed to one body to another.

The committee’s deliberations showed some possibility of blooming into a broader discussion of what the relationship of the DDA should be to the city of Ann Arbor. Sandi Smith mooted the idea that the DDA could operate the parking system on behalf of the city, take out its expenses and forward the surplus to the city just as a matter of course. Pollay observed that under such a system, long-term planning by the DDA for the parking system would be difficult. Collins noted that even if the DDA took a more adversarial approach, choosing to “fight it out” each and every year over the amount to be transferred to the city, it still makes good practical sense to have a strategy that accommodated the possibility than the DDA would end up making substantial fund transfers to the city.

Early in the meeting, Hewitt had cautioned against an adversarial approach this year, wondering if that could lead council to rescind the bonds for the Fifth Avenue underground parking garage. “How much ‘chicken’ do we want to play?” he asked. Hall’s reply was that she didn’t think a game of chicken would end poorly for the underground parking garage, noting the impassioned speeches on the need for more parking that councilmembers had given to support their approval of the bonds.

In the end, it boiled down to Hall wanting to be satisfied that the board was crystal clear in communicating why the parking rate increases were being undertaken. Leah Gunn’s response: “Because we’re building a big-ass parking structure  and undertaking Fifth and Division streetscape improvements.” Hall agreed. At the last board meeting, Hall had stressed that the delay in parking rate increases had implications for the parking structure project. What, wondered Collins, was wrong with what he had given earlier as a reason?

What he had said pointed to the gloomy economic conditions nationally as well as statewide: “What the public needs to understand is that even though the city has done a good job of reducing costs, lowering expectations for city services is a reality everyone will have to deal with.” Hall agreed with that, but said that she did not hear anyone else saying that as a reason. “Can someone else say it, too?” joked Collins. “And that will make it true!”

In identifying the city’s economic conditions as a reason for raising parking rates, Hall felt that the board could give a more honest response to city council’s request for a plan to increase revenue. She said that council’s request itself was not honest, inasmuch as it did not acknowledge that the reason the DDA needed to increase revenue to meet Crawford’s suggested reserve fund targets was council’s own as-yet unofficial request for a $2 million transfer from the DDA.

Resolutions for Consideration by the Full DDA Board

There will be a couple of resolutions brought next Wednesday, March 4, to the full board out of the operations committee meeting. They correspond to the two requests from city council. One resolution will form a DDA committee to participate in discussions of the parking agreement with the city.

The second resolution will be a response to the request for a financial plan to increase revenues to ensure adequate reserves. It will present a “menu” of options identified in priority order. There was a general consensus in the operations committee that increasing the meter bag fee by $5 a day (netting around $180,000 per year) was a good place to start, even if it counted as somewhat symbolic.

Another menu item that would be less symbolic would be for the DDA to reduce its meter rent payment to the city by the $1.5 million municipal bond fee paid in fiscal year 2009-10. This would result in a 10-year projection in which the year with the lowest reserve (fund balance as a percent of annual expenses) would be 17.74%. That year would be fiscal year 2011-2012.

That would mean that every year’s reserve would meet the 15-20% criteria suggested by Crawford. There was, however, no enthusiasm at the DDA operations committee meeting for adopting a minimum reserve percentage of any kind as a policy. No one was able to find evidence of similar formal policies across other governmental agencies. Leah Gunn summarized: “As soon as we set a policy, it burdens us. The city doesn’t have a policy – why should we? We have a 10-year plan that we’re comfortable with.”