Excerpt from a Chronicle chart constructed with DDA parking data from the Ann Arbor public parking system. The vertical scale represents hourly patrons per parking space in a given parking facility. The lines correspond to four facilities in the system: Maynard, Liberty Square, Fourth & Washington, and Huron/Ashley. Pop quiz: Which line corresponds to which facility? Answer in the full report.

On the TIF side, the board first adopted a formal policy to guide its allocation of grants to new private developments. The board then acted to authorize a $650,000 TIF-capture-based grant to the 618 S. Main project. The policy applies to developments that are seeking to leverage support from the state’s brownfield and Community Revitalization Program, or other matching programs.

Highlights of that policy include a priority ranking of benefits that a development must offer. At the top of that list: A requirement that the project fills a gap in the existing market. The DDA board concluded that the 618 S. Main project filled such a gap – by targeting residential space for young professionals. The $650,000 would be distributed over four years, with the amount in any one year not to exceed the estimated $250,000 in TIF capture that would ordinarily be retained by the DDA as a result of the completed construction.

The board was interested in achieving a unanimous vote of support for the 618 S. Main grant, and not all board members agreed with covering bank carrying costs and the full amount of streetscape improvements. So the $650,000 reflected a reduction from a $725,000 grant in the original resolution before the board.

On the parking side of the DDA’s responsibilities, routine business was mixed with issues involving the imminent opening of a new underground parking garage on South Fifth Avenue. In the routine category was the board’s authorization of three-year leases for two properties from companies controlled by First Martin Corp., which the DDA manages as surface parking lots – at Huron/Ashley and Huron/First. Per space, the Huron/Ashley lot generates more revenue per month than any of the other public parking facilities in the city.

The board was also presented with a demand-management strategy for encouraging the use of the new underground parking garage on South Fifth Avenue, which is scheduled to open in mid-July. Highlights of that strategy include a reduced rate for monthly permits of $95/month – a $50/month savings over the $145/month rate set to take effect in September this year, and a $60 savings over the extra increase that the DDA is planning for two structures. The special $95/month permits are available only to current holders of permits in two other parking structures in the system: Liberty Square and Maynard Street. The DDA wants to free up spaces in those two structures for people who do not hold permits, and pay the hourly rate instead.

The DDA board also heard public commentary from advocates for some kind of public park to be constructed on top of the new underground parking structure – instead of using the space for additional surface parking, with the eventual possibility of allowing development of a significantly-sized building there.

In the board’s final action item, routine adjustments were made to the current fiscal year’s budget in order to assure that actual expenses did not exceed budgeted revenues for any of the DDA’s four funds. Last year, the routine adjustment did not adequately cover construction invoices that arrived after the final budget adjustment, something that was pointed out in the DDA’s audit for that year.

Brownfield Grants: Policy

In 2008, the DDA discontinued its partnerships grant program, because the board believed that development interest in downtown Ann Arbor was strong enough that such grants were no longer needed to help spur investment. [.pdf of March 5, 2008 DDA board resolution]

However, the board was approached recently by Dan Ketelaar, developer of the 618 S. Main St. project, with a request for support for the project based on the TIF (tax increment finance) revenue it would generate. The support would count as the local match expected as part of the state’s brownfield program. Ketelaar made his initial presentation to the DDA board on Feb. 1, 2012 after having won a recommendation of approval for his project from the city planning commission on Jan. 19, 2012.

One of the concerns that was expressed by board members through the months-long discussion over the course of several partnerships committee meetings – some of them added to the calendar as special sessions – was the absence of any formal brownfield grant policy. So the policy was developed during these discussions.

Sandi Smith introduced the policy by noting that the DDA’s partnerships committee has struggled with the discussion for several months. She reminded her board colleagues that a draft policy had been presented to them at their May 2, 2012 meeting. She felt that not many of the changes made since then were substantive. The cap was changed, she noted. Another significant change was to try to make the evaluation criteria objective. She noted that the criteria in the policy reflect the priorities and values of the DDA in order of importance:

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

Newcombe Clark suggested adding a clause that stated: “Grant approval will also be contingent on DDA review and approval of any subsequent substantial changes made prior to or during construction, which must be fully disclosed on an on-going basis.”

Clark described the added clause as matching up closely to how things are handled at the city with development agreements, when they’re approved by the city council and then must be reviewed for possible approval at the administrative level or by the council itself.

Nathan Voght – Washtenaw County’s brownfield program coordinator who works in the county’s office of community and economic development – was asked to comment on Clark’s amendment. Voght indicated he felt it was fine – because it would put the developer on notice that the DDA is to be kept abreast of any changes. Smith took the opportunity to acknowledge the work that Voght had done to help with the formulation of the policy, as well as that of Matt Naud, the city of Ann Arbor’s environmental coordinator.

Clark then offered an additional amendment to add a specific item to the list that an applicant must submit as part of the financial pro forma [added language in italics]:

The Developer making a grant application to the DDA must submit a full financial pro forma, including purchase cost and construction cost breakdown, sources and uses including any equity positions that constitute managing member position, rental income or condo sale prices, tax assumptions, and recurring expenses, etc.

Clark’s amendments were accepted as “friendly” and thus did not require a vote.

Roger Hewitt thanked the partnerships committee for the enormous amount of work they’d done. He agreed with the concept of using TIF money to support state brownfield grant money. He supported that, he said. He had hoped that the policy would remove the subjectivity from the evaluation and make it essentially an administrative action. He understood the need to balance what the market wants and what the DDA would like to see – which can be a challenge.

Having gone through the process when the DDA previously had a TIF grant program, Hewitt felt it could lead to long endless discussions and to subjective decisions that will leave some people unhappy. Speaking to the 12 criteria, he said he did not think there’s a developer born who doesn’t think they qualify for some of those. He would have been happier supporting something more administrative and objective.

Responding to Hewitt, Smith ventured that something as objective as he had described might leave the DDA in a position that forces the board to approve a project. She did not want to be hemmed into something so rigid that the board has to automatically approve a project.

John Mouat suggested that it might be worth looking at needed streetscape and infrastructure improvements that could be undertaken, without needing to undergo a brownfield grant application process.

Outcome: The board voted unanimously to approve the brownfield grant policy. [.pdf of brownfield policy as adopted]

Brownfield Grants: 618 S. Main

After approval of the grant policy, Sandi Smith moved into the reason for having such a policy: The DDA had received a request for the kind of support outlined in the new policy – for the 618 S. Main project.

Brownfield Grants: 618 S. Main – Commentary

Dick Carlisle of Carlisle/Wortman Associates spoke at the start of the meeting on behalf of Bill Kinley. They’re partners and tenants of South Main Market, located across the street from 618 S. Main. Since their acquisition of the South Main Market about seven years ago, he said, they’ve made investments to keep the retail space alive and have worked closely with tenants. As a result, the market is now 100% occupied – a total of 14,000 square feet. He said they feel very fortunate, but they also worked very hard to make that happen. He did not want to speak specifically to the 618 S. Main project, but said he was very happy to see private investment being made in that area of South Main Street. All the improvements that are made will be helpful to everyone, if the entrance to downtown Ann Arbor is improved.

His message, Carlisle said, is quite simple: please consider allocating funding for streetscape improvements on both sides of the street [which would include the South Main Market side]. He noted that there’s a lot of pedestrian activity, especially on University of Michigan football game days. There also have been significant traffic issues, he said, due to his own property’s businesses and the gas station on the corner, which generates a lot of traffic. He asked the DDA board to consider allocating funds to make that area more pedestrian friendly.

Ray Detter, during his report from the downtown area citizens advisory council, called 618 S. Main an excellent first use of the policy.

Brownfield Grants: 618 S. Main – Board Deliberations

Based on the criteria in the policy, Smith said, the partnerships committee had concluded that the project addresses a gap in the rental market, that it act as a catalyst for the South Main area, that it will add to the downtown density, and that it has environmental features exceeding the city’s requirements.

The grant that the board was asked to consider included the following line items, for a total of $725,000:

Recommended DDA Brownfield Grant for 618 S. Main Street
$135,000 Streetscape costs (sidewalk adjacent to project on Mosley/Main
$384,500 Streetscape costs (sidewalk on west side of Main north of project)
$100,000 Rain garden to infiltrate storm water, rather than detain and release
$ 80,500 Upsizing the water main under Ashley Street to a 12” pipe
$ 25,000 Bank carrying costs
$725,000 TOTAL

-

The amount of the grant was proposed to be disbursed over four years in the following amounts: $100,000, $225,000, $225,000, and $175,000.

Mayor John Hieftje weighed in with a number of concerns. In the course of conversation with Smith and DDA executive director Susan Pollay, Hieftje drew out the fact that the dialogue about the detail in the streetscape improvements is now starting. Hieftje said he was concerned that the developer be required to actually build to the detailed specifications that are agreed upon. He made an apparent allusion to the Corner Lofts building at State and Washington as an example of a building that was ugly – due to the failure of the developer to build it to the approved specifications.

Another concern Hieftje had was about the bank carrying costs – because he did not feel the DDA should bear that cost. John Mouat ventured that one way to reduce the carrying costs would be for the DDA to front-load its support on the first years of the four-year period. [The board would be constrained in that option by the policy, which states that "the amount released will at no point be greater than the amount of new TIF paid by the developer of the new project."]

Outcome on amendment: The board voted unanimously to eliminate the $25,000 for bank carrying costs from the grant award.

Left to right: DDA board members John Hieftje, Leah Gunn, Nader Nassif.

Hieftje also confirmed that the $135,000 line item for streetscape improvement costs did not include a specific breakdown of those costs for the ordinary work that is required of a developer to perform as part of a project.

So Hieftje put forward an amendment to eliminate the $135,000. Roger Hewitt suggested that there’s a base amount for the sidewalk improvements immediately adjacent to the project that should be the developer’s expense. But he could support improvements that go beyond the city’s minimum requirement. The DDA could support the differential, he said.

Leah Gunn asked Pollay to comment on the sidewalk improvement design. Pollay clarified that the developer, Dan Ketelaar, is planning to do more than what is required by code. She described it as an enhanced planting scheme that’s more than what’s required. Newcombe Clark questioned whether it made sense to talk about what was actually required – because the project has not yet received approval from the city council.

DDA board chair Bob Guenzel asked Nathan Voght how the Michigan Economic Development Corporation brownfield program might view the reduction in local support – which would result from eliminating the $135,000. Voght said the state wants to see a significant contribution.

At the $725,000 level, Voght felt the MEDC was feeling positive about the 618 S. Main application. Gunn said it bothered her that the state won’t just say how much the DDA needs to contribute. Nader Nassif also asked if there were an exact dollar figure that the MEDC was looking for.

Voght ventured that if the amount is still “in the ballpark,” he felt it would be okay. But he stressed that the MEDC has not formally considered the application. He also noted that the state has two programs – a brownfield redevelopment program and the new community revitalization program. Voght said the state is still figuring out the community revitalization program.

Clark ventured that based on his own experience, it’s the amount of enthusiasm from the local authorities that matters, as opposed to the dollar figure. The state doesn’t want to tie its hands so that only the “haves” get the money.

Sandi Smith proposed coming up with a number – some percentage of $135,000 – and encouraging the best-looking streetscape. She didn’t want to leave the amount shy of what was necessary to get a good streetscape.

DDA board member Newcombe Clark.

Gunn offered an amendment to Hieftje’s proposal to eliminate the $135,000, instead cutting the amount to $100,000. She was concerned there could be a “tipping point” past which the state would not consider the local match to be sufficient. Hieftje indicated a preference to go down to $85,000. Clark ventured that for the state of Michigan, a unanimous vote would be more interesting than an additional $15,000.

Outcome on amendment to grant $100,000 instead of $135,000 for sidewalk improvements: It failed with only 10 members present and four members voting against it – Hieftje, Hewitt, Mouat and Clark. It needed seven votes to pass.

So Gunn tried again, this time offering an amendment to make the amount of support $85,000.

Outcome on amendment for $85,000 instead of $135,000 for sidewalk improvements: It passed unanimously.

With the reduction in the grant award now resulting in a $650,000 award, Hieftje returned to the topic of the rain garden. Smith explained that under the city code, detention is required, which could be achieved at a cost of around $100,000. That approach detains stormwater in a tank, then releases the water into the stormwater system pipes. The benefit offered by a rain garden with infiltration is that it keeps the stormwater out of the pipe. It’s not about the visual aesthetics of the rain garden. The cost of the rain garden would be around $850,000, so the DDA was supporting something that went $750,000 beyond what was required, she said.

Outcome: The board unanimously approved the $650,000 grant to the 618 S. Main project.

Parking System

The DDA operates the public parking system under a contract with the city of Ann Arbor. Under terms of the contract, the city receives 17% of gross parking revenues from the system. So the public parking system, which is mostly located within the Ann Arbor DDA TIF (tax increment finance) district, is a topic at nearly every DDA board meeting.

Parking System: Monthly Report – Break in Trend

A standard part of a DDA board meeting is an update on the monthly parking report, looking at the most recent month for which data has been analyzed. At the June 4 meeting, board members discussed data from April 2012. In giving an overview, Roger Hewitt noted that for April, the revenue to the system was up compared to April 2011, but it had not increased as much (on a year-over-year basis) as in previous months. He also noted that there’d been a decline in the number of hourly patrons. So he’d asked Republic Parking to take a closer look at that, he said. Republic Parking handles day-to-day parking operations under a contract with the DDA.

Ann Arbor public parking system: Total revenue

Ann Arbor public parking system: Hourly patrons

One factor contributing to the decline, Hewitt reported, is that there was one fewer business day in April this year – 25 compared to 26. In addition, there were two fewer “weekend days” [Friday and Saturday] – 8 compared to 10. Another wrinkle was that this year, the University of Michigan held graduation on four days, all in April. Last year there were only three days of graduation, and one had been in May, Hewitt reported. And the parking pattern for graduation attendees, he said, is that they enter the structure as hourly patrons, but stay almost the whole day. So the number of patrons is depressed, even though the revenue is the same.

Hewitt noted that revenues were still up 9%, which he characterized as a solid increase – more than the 6-7% range for the rate increases.

Parking System: Demand Management – Maynard, Liberty Square

Hewitt gave the board an update on the parking demand management system that the DDA’s operations committee has been working on, in connection with the completion and opening of the new underground parking garage on South Fifth Avenue. The board had given the committee direction to undertake development of the program at its May 2, 2012 meeting.

In broad strokes, the DDA would like to reduce the number of spaces taken up by monthly permit holders in the parking structures nearest to the high-demand University of Michigan campus. The DDA would also like to ensure usage of its new underground parking garage.

Hewitt summarized the approach as establishing prices for parking based on the demand in a particular area – higher demand areas have higher prices and the lower demand areas should have the lowest prices. Integrated into the concept is a component for alternative transportation, he said.

The DDA has asked the getDowntown program to do a transportation audit for the State Street and South University Avenue businesses. The DDA has also asked that getDowntown do some targeted marketing and communication to those businesses. Further, the getDowntown program has been asked to encourage businesses to adopt a “transportation stipend” program, instead of just providing a monthly parking permit. The stipend would allow employees to realize the savings that would result from opting to take public transportation, instead of claiming an employer-provided monthly parking permit. The Zipcar car-sharing program would be expanded in the Maynard Street parking structure, Hewitt reported. In-street bike racks will also be added to the State Street area.

From experience, Hewitt reported, the Maynard Street structure does fill up in the middle of the day, and people have to wait to get in. Liberty Square, Hewitt said, is also near capacity. Hewitt then unveiled the details of what he described as a two-year pilot program – based on the DDA’s experience in opening a new parking structure. A new structure doesn’t get used much for the first couple of years, Hewitt said. It takes the public a couple of years to find it and to start using it routinely.

So the idea is to “jump start” that process, Hewitt said. Currently, based on rate increases approved by the DDA board earlier this year, monthly permit rates are scheduled to increase from $140 to $145 per month on Sept. 1, 2012. Hewitt announced that for the Maynard Street and Liberty Square structures – the two highest demand structures in the system – rates would now be raised even higher, to $155 per month. Hewitt said there are around 700 monthly parking permits in the roughly 1,400 total spaces in those two structures, so the idea is to move those monthly permit holders to the new underground garage.

Ann Arbor public parking system: Patrons per space. To give an idea of the maximum usage in the system – measured in terms of patrons per space in a facility – this chart includes the Huron/Ashley/First surface lot (light green). None of those surface lot spaces are used for monthly permits. To give an idea of the maximum usage in a parking structure that allows no monthly permit parking, the chart includes the Washington/Fourth structure (light orange). The two structures that are the target of the incentive program – to move monthly parking permits from there to the new underground structure – are Maynard Street (blue) and Liberty Square (red). Chart by The Chronicle, using data from the DDA. One way to observe the effect of the demand management pricing will be to track whether the red and blue lines increase. (Links to larger image)

By way of background, the contract between the DDA and the city of Ann Arbor, under which the DDA operates the city’s parking system, was revised in May 2011 to give the DDA the unilateral authority to adjust rates, without approval by the Ann Arbor city council. However, the contract requires the DDA to announce intended rate increases at a board meeting, hold a public hearing at a subsequent board meeting, and not vote on rate increases before a third board meeting.

The rate increases triggering the public announcement and hearing process are described in the contract as “any increase in the Municipal Parking System’s hours of meter operation or parking rates intended to persist for more than three (3) months.” Based on a telephone interview with DDA staff, the DDA is interpreting the clause to apply to parking meter rates, not monthly permit rates.

The rate changes are meant to be revenue neutral, because the increase in rates for the two high-demand structures are expected to be balanced against the decrease in monthly permit costs for the new underground garage.

The monthly permit rate increases were characterized by Hewitt as the “stick part” of the plan. The “carrot part” is an offer of cheaper monthly permits to current permit holders in the Liberty Square or Maynard Street structures – if they move to the new underground garage. It would be a $60 savings compared to the monthly permit rate they’d pay if they stay in their current structure. The rate of $95 per month in the new underground structure would be good for two years. Any new users of the system would also be offered the $95 per month rate.

Hewitt characterized the plan as the first real substantive experience with differential rates in parking structures. “We’ll see what happens,” he said. Even though the spaces they’re offering in the new garage will be cheaper, the DDA expects that those are spaces that would otherwise be empty – because the DDA is not expecting a lot of underground parking garage use in the first few years. Hewitt felt that by opening up Liberty Square and Maynard Street to more hourly patrons, the enormous demand could be met for that kind of parking. The new rates, as well as the incentives for parking permits, will be implemented Sept. 1, Hewitt said.

Nader Nassif thought the incentive system is a great idea. He reported that based on his hard-hat tour of the new underground garage, he felt it’s actually a very well-designed, beautiful structure. It’s impressive to see natural light from several levels underground, he said.

John Mouat stressed the need to use getDowntown to help get the word out. Board chair Bob Guenzel thanked the DDA staff for their hard work putting together the incentives.

Outcome: This was not a voting item. The board had given direction at its previous meeting to the operations committee to develop the demand management pricing.

Surface Lot Leases

The board considered lease agreements for two surface parking lots in downtown Ann Arbor. One lot is known as the Brown Block, bounded by Huron, Ashley, Liberty Washington and First streets. The other is located on the southeast corner of Huron Street and South Fifth Avenue. The new leases extend for a period of three years.

Surface Lot Leases: Background

The DDA manages the two lots as part of Ann Arbor’s public parking system. The leases, which have been in place for several years, are between the DDA and two limited liability companies owned by the local real estate development firm First Martin Corp. Those two companies are Huron Ashley LLC and City Hall LLC. The lease for the Brown Block had been with the city of Ann Arbor, but this year it’s with the DDA – due to the fact that the city and the DDA signed a new contract last year, under which the DDA operates the city’s public parking system.

The monthly rents paid to First Martin under terms of the leases are stipulated at $28,333/month and $2,122/month, respectively. Based on arithmetic done by The Chronicle on DDA revenue data, the monthly revenues for the two lots since July 2009 have averaged around $61,000 and $9,500, respectively. There is a provision in the leases for the rent paid to the DDA to increase based on the consumer price index (CPI).

Ann Arbor public parking system: Revenue per space by selected facility. Surface parking lots, like the Huron/Ashley/First lot, show the highest revenue per space. The lowest revenue per space is derived from metered on-street parking. Structures show varying amounts of revenue per space, based in part on the number of monthly parking permits they allow.

Ann Arbor public parking system: Huron/Ashley/Liberty. Revenue on the surface lot shows the same kind of upward trend as the rest of the system.

Although the two parcels are not zoned for parking use, First Martin Corp. could itself choose to use the surface parking lots for commercial parking – as a pre-existing, non-conforming use, according to city planning manager Wendy Rampson’s response to an emailed query from The Chronicle. The lot on the Brown Block is used by the DDA for hourly parking, paid to an attendant in a booth. The other lot, across the street from Ann Arbor’s city hall and new Justice Center, is used for monthly permit parking.

Surface Lot Leases: Board Deliberations

Newcombe Clark was keen to establish that the new lease amounts for the two lots did not reflect any more than a simple CPI increase from the previous amounts.

Outcome: The board unanimously approved the two lease agreements for the surface parking lots.

Library Lot

John Splitt gave an update on the construction of the underground parking garage, which is nearing completion. South Fifth Avenue between Liberty and William had been expected to reopen by the end of May, but that re-opening was delayed. At the June 4 meeting, Splitt gave June 18 as the new date for probable re-opening of the street, and July 12 as the date of the opening of the structure.

The Library Lot, as the parcel is called due to its proximity to the downtown library, is part of the area of study for the DDA’s Connecting William Street project, which aims to find alternate uses for the surface parking lots in the area bounded by William, Ashley, Liberty and Division streets. That project is being undertaken by the DDA at the direction of the Ann Arbor city council, given last year on April 4, 2011. As the opening of the underground structure draws closer, advocacy for construction of a park on top of the lot has become more vocal.

Library Lot – Public Commentary

Commentary by Will Hathaway and Eric Lipson focused on the future of the top of the new underground parking garage, which is due to be completed in mid-July. By way of brief background, a request for proposals (RFP) process that could have led to the selection of a development project on top of the underground parking structure was terminated by the Ann Arbor city council on April 4, 2011. The proposal in play at that point was for a conference center. The parking structure includes reinforced footings designed to support future development on the site. Among the proposals that were rejected in the earlier phases of the RFP review process were two that envisioned the use of the area as primarily open space – some kind of park.

Lipson essentially ceded his time to Hathaway, who reprised many of the points he’d made at the DDA board’s meeting the previous month, on May 2, 2012. He told the board that his group was working to promote the idea of a park of some kind on the Library Lot. [It's called the Library Lot, but the Ann Arbor District Library does not own the parcel.] He’d put together a slide show to promote that, he said.

He began by saying that Ann Arbor lacks public space downtown for people who work and live. Ann Arbor previously had a town square, he said, in the form of the lawn at the old 1878 Washtenaw County courthouse, which had stood on the block of Huron and Main.

Hathaway suggested that the top of the underground parking garage is a place in the middle of Ann Arbor that could be a missing “Central Park,” bounded by Fifth Avenue, William, Division and Liberty streets. He described the block as anchored by the downtown location of the Ann Arbor District Library. But he also noted that the area is home to organizations like the Center for the Education of Women, the Christian Science reading room, the University of Michigan Credit Union and the Inter-cooperative Council. Small businesses in the area include Jerusalem Garden, Earthen Jar, Seva, Comedy Showcase and Herb David guitar studio.

Hathaway described Liberty Plaza on the northeast corner of the block as the only park in downtown Ann Arbor – a modest open space connected by a ramp and footpath to the Library Lot. Hathaway pointed out that the Library Lot was formerly a surface parking lot, that’s been transformed by the new underground parking garage. So the question is how to use the top of the new parking garage, he said.

The Calthorpe study from the mid-2000s recommended a “town square” on that site, Hathaway said. A hotel/conference center was proposed and rejected, as were two proposals for parks – because the RFP review committee contended that they would not create adequate economic benefit. So Hathaway ticked through other examples of park-like spaces that had generated economic benefit: Campus Martius and River Walk in Detroit; Post Office Square in Boston; Millenium Park in Chicago; the High Line Park on an abandoned rail line in New York City; and Discovery Green in Houston. All those parks generate economic benefits through “place making,” he said. That happens in several ways, Hathaway continued: revitalization of an existing building, new construction, more customers, and increased tax revenue.

Liberty Plaza is the only green space in the downtown, Hathaway said, and creating a pedestrian link to the Library Lot would essentially create Ann Arbor’s downtown Diag [a reference to the University of Michigan campus landmark]. He suggested that the Ann Arbor District Library could extend itself in connection with an adjacent park. Outdoor features that might be constructed on the Library Lot space, he said, include ice skating, interactive sculptures (like the Wave Field or The Cube), a sculpture plaza, or a town square gazebo.

The current plan is to put around 40 surface parking spaces temporarily on the top of the parking garage. So Hathaway concluded by saying that the choice is between a park or a parking lot. On July 14, after the grand opening of the new garage, his group has permission to host an event on top of the parking garage. It will be an afternoon for celebration of the end of construction and the businesses nearby who’ve endured the turmoil. It will be an opportunity to envision what a park on that spot might look like.

Library Lot – Board Response

Sandi Smith responded to the slide show presented by Hathaway by saying she appreciated the passion of his group, but said she found it “slightly disingenuous” when the location of the underground parking garage is bordered for the most part by historic districts. What’s displayed on the slides, she contended, is not feasible to achieve in the center of Ann Arbor.

From left: DDA board members Newcombe Clark, John Mouat and Sandi Smith.

Every example that Hathaway had given, she said, has high-rise buildings all the way around – extreme density. In Ann Arbor, she said, there are not even 5,000 people living downtown yet. She wanted the Connecting William Street process to unfold and she wanted Hathaway and his group to participate in it. Smith said it’s important to keep in mind that “we’re not Houston, we’re not New York City. We just don’t have the possibility of creating what was presented to us today.” She concluded her remarks by saying it’s important to keep in mind what is possible.

Mayor John Hieftje, who sits on the DDA board in a position created by the organization’s state enabling statute, agreed with Smith, saying that it’s “a little bit disingenuous” to say Liberty Plaza is the only green space in downtown Ann Arbor. Hieftje then went on to describe the University of Michigan Diag as a public park that is populated by students, people of Ann Arbor, and families having picnics. It’s a “state of Michigan park,” he said, that is “open and available to all of us.” Hieftje also pointed to an area near the new North Quad residence hall at State and Huron as an additional park. All those spots on University of Michigan property should also be shown as green space on the map in Hathaway’s presentation, Hieftje contended.

Regarding Liberty Plaza, Hieftje said he and Ward 1 councilmember Sabra Briere – along with city parks and recreation manager Colin Smith and park planner Amy Kuras – had taken a look at Liberty Plaza. Hieftje said there may be a possibility to redesign Liberty Plaza and there might be some grant money available.

Hieftje also said it might be possible to use some parks capital improvements millage money for Liberty Plaza work. A request might also come to the DDA. He said he did not want improvements to Liberty Plaza to be construed as opposition to a significant park on the Library Lot. He then went on to describe how in his time as mayor, he’d been very active in adding parkland to the city.

Library Lot: Public Commentary – Reprise

At the conclusion of the meeting, Nancy Kaplan addressed the board on the future of the Library Lot. [Kaplan serves on the Ann Arbor District Library board.] She asked the board to consider the results of a survey that the DDA had done. The responses showed support for green space in the Connecting William Street study area. She said that although Liberty Plaza has failed as a park, its existence shows that the city was willing to have a green space.

In the area where the Library Lot is located, Kaplan said there’s a need for respite from stone and hardscape. She asked the board to do something, at least temporarily, that would allow for a use of the top of the underground structure that is different from surface parking. She suggested using tree plantings. She encouraged the board to try it as a pilot program. Kaplan said the area has a lot of unattractive buildings and needs some respite from that.

Kitty Kahn told the board she totally agreed with Kaplan. She asked why a green roof on top of the underground garage couldn’t be tried. She contended that there is plenty of parking and that more is not needed. She urged the board to give the idea of some green space a try.

Annual Budget Adjustment

The DDA board considered amendments to its previously approved fiscal year FY 2012 budget (ending in three weeks, on June 30). It is an annual exercise undertaken to ensure that the actual expenses incurred are allowed for in the budget.

An example of a major difference between the already authorized budget and the amended version is an adjustment upward from $1,017,847 – for capital construction costs from the TIF (tax increment finance) fund – to $3,480,701. Those costs are construction invoices related to the new South Fifth Avenue underground parking garage, which is expected to open in mid-July. The budget adjustment is conservative, in that it assumes the parking garage will be completed and invoices will be submitted by the end of June, although that’s not likely. [.pdf of FY 2012 budget revision]

DDA board member Roger Hewitt.

Last year, the DDA received construction invoices after its final regular budget adjustment that resulted in an excess in expenditures over budgeted revenues for the fiscal year ending June 30, 2011. The overage was identified in the regular audit that was done by Abraham & Gaffney, P.C. as inconsistent with Michigan’s Uniform Budgeting and Accounting Act (UBAA) of 1968. DDA staff attributed the $337,478 overage to the submission of a bill forwarded to the DDA in June by its construction management consultant, Park Avenue Consultants Inc. The bill was for the underground parking garage and streetscape improvement projects that are currently under construction.

This year an additional effort was made to ensure that the final budget adjustment allowed for additional construction invoices that might be submitted between now and the end of the fiscal year.

South Fifth Avenue between Liberty and William is expected to reopen in mid-June, although it was most recently expected to open by the end of May.

Roger Hewitt introduced the item to the board and gave the background, noting that a city councilmember had been sharply critical of the DDA in connection with this issue in the past. [He was alluding to Stephen Kunselman, who represents Ward 3.]

Aside from some lighthearted commentary about a line item for the graffiti-removal product Elephant Snot, and more serious inquiry about the inclusion of the cost of surface lot leases in the direct parking expenses category, there was not a lot of board deliberation on the budget adjustments.

Outcome: The board unanimously approved the adjustments to its FY 2012 budget.

Communications, Committee Reports

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

Comm/Comm: State Street

During public commentary, Frances Todoro addressed the DDA board as a member of the State Street Area Association board. She noted that the State Street area currently has some challenges with respect to retail space – frequently turnover, for example, and the opportunity for the former Borders space. As a board, the SSAA has expressed a desire to learn more about opportunities, what is possible in the community. Specifically, she described an interest in having a retail location analysis done, that would encompass the entire downtown. It would be something that landlords, merchant associations, everyone who wants to understand the potential for downtown Ann Arbor could participate in. Questions such a study might answer include: Who wants to be in Ann Arbor? What demographic would make a retailer successful?

Todoro said the SSAA is interested in partnering with the DA to make the study happen.

During his remarks near the beginning of the meeting, mayor John Hieftje mentioned an improvement he’d like to see in the State Street area – widened sidewalks through bumpouts. It would enhance the outdoor dining possibilities, he said, making it more like Main Street. The sidewalk currently is too narrow there, he said. The idea of bumping out the sidewalks on State Street in downtown is something he said he did not want to fall off the radar screen. [Hieftje had begun talking about that idea around a year and a half ago.]

Responding to Hieftje’s suggestion to increase opportunities for outside dining on State Street, Roger Hewitt quipped that he supported Hieftje’s comments strongly. [Hewitt owns the Red Hawk Bar & Grill on State Street, which would benefit from that kind of streetscape improvement.]

Comm/Comm: R4C Zoning Review

Ray Detter, during his report from the downtown area citizens advisory council, said that the CAC had asked mayor John Hieftje to support the report from the R4C/R2A review committee. He characterized the work of that committee as reflecting an overwhelming desire to preserve streetscapes in the R4C/R2A area and to curb development patterns that depend on the accumulation of lots so that larger projects can be built. [See Chronicle coverage: "Planning Group Weighs R4C/R2A Report."]

Comm/Comm: Near North

Mayor John Hieftje gave an update on the latest report from Avalon Housing’s Near North affordable housing project. The DDA board had voted on Sept. 7, 2011 to extend a $500,000 grant that it had previously awarded. At that time, the closing on the deal had been thought to be imminent. At the June 4, 2012 meeting, Hieftje reported that financing was now expected to be finalized at the end of June. Demolition of the vacant houses, he said, would be expected to begin in July.

Present: Nader Nassif, Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, John Mouat.

Absent: Keith Orr, Joan Lowenstein.

Next board meeting: Noon on Monday, July 2, 2012, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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The move comes as the opening of the new underground parking structure on South Fifth Avenue, offering around 700 additional total spaces, is set to open by the start of the Ann Arbor art fairs, which this year run from July 18-21. Monthly permits for some of the spaces will be offered at the new structure, which will add to the five public parking structures where permits are available: Ann & Ashley, Forest Avenue, Fourth & William, Liberty Square (Tally Hall), and Maynard.

Under a demand management strategy, prices of monthly permits at the underground parking structure are likely to be lower  than at other structures.

[Google Map of parking structures with monthly permits] [.jpg of map of parking structures with monthly permits]

This brief was filed from the DDA offices at 150 S. Fifth Ave., Suite 301 where the meeting was held. A more detailed report of the meeting will follow: [link]

Russ Collins (left) shakes hands with former board member Gary Boren, who was recognized for his service at the DDA's Sept. 7, 2011 board meeting. (Photos by the writer.)

The Near North decision came over the objection of three board members, who expressed concern over unanswered questions about the project’s timeline. Avalon had also requested that the intent of the resolution be expressed in the form of a contractual agreement and that the period of the grant be two and a half years, instead of the maximum two years normally attached to DDA grants. The additional time is needed in order to cover a sufficient period to achieve LEED certification.

Representatives of the construction trades, who objected to the selection of the Grand Rapids-based Rockford Construction as the general contractor for the Near North project, as well as a resident spoke against the DDA’s grant award during the time allowed for public participation.

The three votes against the grant renewal came from Newcombe Clark, Roger Hewitt and Russ Collins. With the absence of board members Keith Orr and Bob Guenzel, the 12-member board still achieved the minimum seven votes it needed for approval of the grant.

Despite his absence from Wednesday’s meeting, Guenzel was voted as the new chair of the DDA board, filling a vacancy in that position left when the recently elected chair, Gary Boren, was not nominated for reappointment to the board when his term expired on July 31. Boren was on hand to accept a resolution of appreciation for his service on the board.

In connection to the officer election timing issue, Clark asked for a review of the board’s bylaws by the board’s executive committee. Clark has raised the issue during the July officer elections for the last two years. Because the mayor has been reticent about his intended appointments, DDA board members have elected their officers for the coming year without knowing if all board members with expiring terms will be reappointed. Clark asked that the bylaws possibly be changed so that board officers are elected after appointments are made, so that it’s clear who will be serving on the board.

In other business, the board unanimously passed a resolution of support for the RiverUp! program amid some discussion of the appropriateness of the resolution – in light of the fact that the Huron River does not flow through the DDA tax district.

The board also passed a resolution encouraging the Washtenaw County board of commissioners to enact an economic development tax on county residents. About half of the tax proceeds would go to Ann Arbor SPARK. The resolution came at the request of DDA board member Leah Gunn, who also serves on the Washtenaw County board. The Ann Arbor city council had previously passed a resolution encouraging the county board to enact the tax. The county board gave initial approval to the tax later that evening.

As part of the reports from various board committees, Roger Hewitt stressed that the parking rates and hours of enforcement discussed at the previous week’s operations committee meeting were merely the start of the discussion. The DDA is currently discussing what kind of proposal it will present to the city council at a November joint work session on parking. Under its new contract with the city to manage the public parking system, the DDA’s authority to set rates and hours of enforcement comes with specific requirements on public input.

The city council also has directed the DDA to explore alternate uses for some of the city-owned surface parking lots in the downtown. Board members got an update on the status of the DDA’s effort to plan how to implement that directive. 

Near North Housing Grant

The board was asked to consider renewal of a grant to Avalon Housing that board members had originally approved in early 2010 for the Near North affordable housing project on North Main Street.

The grant is for $400,000, with another $100,000 available if the project achieves certification under the Leadership in Energy and Environmental Design (LEED) – a green building certification system. The grant would be paid when the project receives a certificate of occupancy. Avalon must also have an agreement in place with the city/county office of community development to ensure that income eligibility requirements are met for all residents.

A vacant house on North Main Street on the site of the planned Near North housing project.

The income eligibility requirements for the 39 units in Near North are based on affordability as defined for two categories of apartments. For 25 apartments, rents must be affordable to households with incomes at less than 50% of area median income (AMI). The remaining 14 apartments are for supportive housing and will have Section 8 rent subsidies.

The Near North project is outside the DDA tax district boundary, but is within the quarter-mile radius established by DDA board policy for such housing fund expenditures.

The planned unit development (PUD) for the Near North project was given approval by the Ann Arbor city council on Sept. 21, 2009.

Near North Grant: Public Commentary

Michael Appel, Avalon’s associate director, led off public participation time by describing the request for an extension of a previous grant the board had authorized to Avalon for its Near North affordable housing project. He sketched out the basics of the project: There would be 39 units on North Main Street, the main entryway to downtown. The project will meet the city’s housing goals, he said.

Appel ticked through some of the timeline points for the project. He noted that Avalon was awarded the DDA funds early in 2010.

By way of background, it was at the Jan. 6, 2010 meeting that the DDA board took that vote. By board policy, grants automatically expire at the end of the fiscal year following the year they are awarded. That board policy was established by a vote of the board at its March 4, 2009 meeting.

While the DDA grant period has come to be thought of as a two-year period, two years is actually a maximum in calendar terms. That maximum could occur if a grant were awarded in early July, just after the start of the DDA’s fiscal year – the grant would be good through the end of the fiscal year, ending on June 30 two years later. But if a grant is awarded in early June, the end of the next fiscal year would be only 13 months away.

In a followup email to The Chronicle, Appel clarified some of the dates, which he’d inadvertently misstated in addressing the board. The accurate timeframe for Avalon’s application for tax credits was spring 2010. The tax credits were awarded in the summer of 2010. Appel went on to explain that a key piece of funding – brownfield tax credits from the state of Michigan – were eliminated by the legislature during tax reform legislation after the 2010 elections. By the summer of 2011 new legislation had been passed, which preserved the brownfield funding source.

In addressing the board, Appel stressed that the general contractor Avalon had selected [Rockford Construction] had worked hard to solicit a wide range of bids for subcontractors. Around 1,500 solicitations had been sent out, he said.

Appel concluded with two specific requests of the DDA. He noted that the DDA doesn’t typically sign grant contracts, but rather works off of resolutions. Avalon was requesting that the resolution before the DDA staff include authorization of the DDA staff to draw up a formal contract. The four-minute time limit on public speaking time expired before Appel could get to his second request: to extend the grant period beyond the usual timeframe, which would have ended the grant period on June 30, 2013.

The rationale for the extension was based on the need to have the building in operation for some period of time in order to gather sufficient data to achieve LEED certification. The DDA’s grant makes $100,000 contingent on achievement of LEED certification and the other $400,000 contingent on a certificate of occupancy.

Tom Yax spoke on behalf of U.A. (United Association) Local 190, a union of plumbers, pipefitters, service technicians and gas distribution workers. He told the DDA board the local union basically supports the awarding of the grant.

However, Yax described his union’s opposition to the award of the general construction contract to Rockford Construction, because of Rockford’s location in Grand Rapids and concern that, as general contractor, Rockford would award subcontracts to non-local workers. When you give work to outside contractors, Yax said, they make money, then leave the community, and they don’t do any charity work in the community. Yax described a range of community efforts by the union. He encouraged the use of local businesses and contractors. Every dollar spent locally passes through the economy six times, he said.

So Yax explained that the union was against awarding the grant unless assurance could be given that there would be local contractors. Why spend money on contractors who leave? he asked. Near North is a prevailing wage job, so there’s no reason not to hire local contractors with local workers, he said.

During the time for public participation at the end of the meeting, Margaret Schankler introduced herself as a resident who lived behind the Near North property. She called it unfortunate that the board had extended its usual grant period to December 2013, but that they didn’t have four minutes for additional public participation before the vote.

By way of background on public commentary, the DDA board entertains public participation at the start of its meetings by allowing up to four people to speak – it’s possible to sign up in advance. If fewer than four people sign up, people from the audience who have not signed up are invited to address the board. In no case are more than four people allowed to address the board at the start of the meeting.

Later, at the conclusion of the meeting, an unlimited number of people can address the board. The time limit for all speakers is four minutes. Public bodies like the DDA board are required under the state’s Open Meetings Act to allow any member of the public to address them during their meetings.

Schankler told the board that she’d heard the phrase “closing in a few weeks” more times than she could count. She commended board member Newcombe Clark for asking questions. She noted that the neighborhood had worked with developers and negotiated something they thought the whole neighborhood could live with. That had come after the neighborhood had urged Avalon to build a much smaller project – but they’d been told it needed to be that large to make the numbers work. She criticized the fact that only 14 of the 39 units in Near North are for supportive housing.

She said that the still-unbuilt units of Near North are being counted as replacements for the 15 units that Avalon is eliminating in connection with its project at 1500 Pauline. Considering the 1500 Pauline project and Near North, the two projects together result in no net gain for supportive housing in Ann Arbor, she said.

Schankler also contended that the existing houses (now vacant for two years) previously rented for rates that were half what will be charged for the new units. She also pointed to the high cost of construction for the new units – $378 per square foot. She told the board that’s twice as much as it would cost to build a two-bedroom condo.

Schankler criticized the lack of more publicly documentable progress on the project. She also criticized the fact that the existing houses had been allowed to deteriorate beyond repair, which she contended was intentional in order to ensure brownfield funding.

Now, the DDA had a chance to step back from the project and to redirect scare resources more wisely inside the DDA district. [The Near North project is outside the DDA tax district, but within the quarter-mile radius the DDA board has set as the area in which it's willing to invest housing dollars. In this the DDA has relied on advice from its legal counsel that it is legal to take this approach.]

Also at the end of the meeting, during time allotted for public participation, Ron Motsinger of the International Brotherhood of Electrical Workers (IBEW) Local Union 252 told the board that the local union represented hundreds of building contractors in all trades. He pointed to current levels of unemployment in some trades of over 33%. Local workers are hurting for jobs, he said. He had been excited to see the Near North project come in, but was disappointed that Rockford Construction was chosen as the general contractor.

Motsinger contended that Rockford has a track record of not using local contractors. Hutzel, a 150-year-old local company, had not been notified to bid on the project. He had no confidence Rockford would use local labor. Motsinger said the local had done $100,000 worth of charity and community work, citing specifically that it had bought scoreboards for Skyline High School. It really would have been nice to make sure it’s local people who are hired, he said. There are local general contractors who could have done the job. He said it was disappointing to see the resolution rushed through.

Rob Turner who represents District 1 on the county board of commissioners, also addressed the board at the end of the meeting. He is the owner of Turner Electric Service Inc. in Dexter. He said he was excited when the Near North project was approved – it helped poor people and he was happy for that. It could also help the building trades, he said. But when he heard that Rockford Construction had been selected as the general contractor, he was disappointed. As an alternative, he mentioned O’Neal Construction as a local general contractor who has experience with federally-funded projects.

Turner described Rockford as dealing with “non-responsible bidders.” Non-local firms don’t shop and buy locally, he said. He acknowledged that his firm was asked to bid on the Near North project. However, he’d received the invitation to bid just one week before. He’d tried to get a set of plans online but was unable to obtain them that way. They had been available physically in Grand Rapids and Bloomfield Hills, he said. He asked the board if that kind of bid process sounded conducive to local contractors. Given that the grant contract is not done, he said, he thought some language could be added to ensure that local companies had better access to the work.

Near North Grant: Board Deliberations

When the board took up the issue of the grant renewal, Appel was asked to the podium to clarify the nature of Avalon’s request. Appel explained that Avalon anticipated closing on their deal in the next month or so. The other funders will want written assurance that the $400,000 plus the $100,000 (contingent on LEED certification) is committed from the DDA. When Avalon closes, Appel said, the other funders will want to know that the $500,000 commitment is secured. DDA executive director Susan Pollay had told him, Appel said, that it’s not DDA standard practice to create a grant agreement.

DDA board member Newcombe Clark.

The second part of the request was a longer-than-usual grant period. If renewed now, then June 30, 2013 would be the natural expiration, he said. Appel requested that it be extended through Dec. 31, 2013, because by then the building would be operating long enough to achieve LEED certification.

Joan Lowenstein asked what the potential impact would be if the decision were put off until the operations committee could again review it and bring it back to the board. Appel said he was worried that a delay could affect the closing on the deal. Lowenstein invited Appel to talk about the bidding and the local contracts, which had been raised during public participation time at the start of the meeting.

Appel said that Avalon had looked at a number of issues in selecting a general contractor. Among them were the contractor’s experience in Washtenaw County, the experience building this type of housing, and experience with the Michigan State Housing Development Authority (MSHDA). Avalon had selected Rockford Construction because Rockford brought the most to the table, including experience in Washtenaw County. Before issuing bids, Appel said, Avalon had made sure that local subcontractors were well represented. For the early bid packets, only one-quarter came from western Michigan, where Rockford is located.

Appel said that because the project has federal funding, it brings with it various requirements for oversight – that includes prevailing wage requirements. There’s a highly-regulated open bid process. The bids were widely circulated for anyone to download the specifications, Appel said. He said he understood and respected the desire to support local businesses. Federal regulations make sure that everybody has access to the bidding process, he said.

Appel cautioned that a delay at this point would not allow Avalon to bring a document to the closing that showed the funding is secure.

Board member Newcombe Clark indicated that he thought the urgency was generated by the DDA board’s bylaws, not by Avalon’s timetable.

Pollay explained that the Avalon grant had sun-setted on June 30, 2011. The renewal had been discussed at the previous week’s operations committee meeting, Pollay said.

Clark said he had supported the Near North project and that he still supported it. He wanted to see it “come out of the ground,” he said. But Clark he said he also wanted to see his questions answered. He felt the DDA board was being rushed into creating closing documents, and the extension was for longer than the DDA’s usual grant period – it was for a 2.5 year extension. He’d wanted to explore several questions. Clark concluded that he could not support the project, based only on the information he had.

Responding to a question from board member Leah Gunn, Appel explained that the overall Near North project is relying on the DDA grant money – other funders need to know that the DDA’s commitment is there. Clark chimed in, “We’re free equity.”

Appel continued by saying that a copy of a DDA board resolution is not what real estate attorneys are accustomed to seeing at a closing. He said Avalon needed something that third parties would understand in the context of a real estate closing. Board member Roger Hewitt observed that the board was being asked to support the resolution when the document doesn’t exist yet.

Mayor John Hieftje said that the DDA’s offer of a grant was very sincere and he didn’t have a problem putting it in writing. He said he trusted the executive committee of the DDA board to do that. [According to DDA board bylaws, the executive committee consists of the chair, vice chair, treasurer and recording secretary. The last former chair is a non-voting member, and the executive director is a non-voting ex-officio member of the executive committee.]

Hieftje said that Avalon has to balance a lot of different factors with other entities that are larger than the DDA. Timing issues are hard. He said the DDA had committed to the Near North project a long time ago. Board member John Splitt also indicated that he had no problem with voting for the resolution. Board member John Mouat also supported the project. He noted that an incredible amount of time and work has been put in to make the project work. He said the DDA board owed it to the community to support it.

Responding to the concerns raised by representatives of trade unions, Gunn explained that the board doesn’t have the ability to say who gets a contract. She also noted that new state legislation forbids CUB (Construction Unity Board) agreements – it’s not for the DDA to decide. [CUB agreements are negotiated between local trade unions and contractors, and require that contractors who sign the agreement abide by terms of collective bargaining agreements for the duration of the construction project. In return, the trade unions agree that they will not strike, engage in work slow-downs, set up separate work entrances at the job site or take any other adverse action against the contractor.]

Comments from Hieftje and Gunn established that the city of Ann Arbor and Washtenaw County both needed to take action to revise policies to make them conform to the new state legislation on CUB agreements.

Clark asked for information on the site plan and whether it needed to be renewed with the city. Lacking other information, he said, he had to default to his own expertise. Clark said he did not want to go through the winter with vacant houses sitting on the site. He lamented the fact that the board did not have more time to consider the resolution.

Board member Sandi Smith said she’d been trying for seven years since she’d been appointed to the DDA board to spend the housing fund balance. It’s been difficult to add even a single unit of affordable housing, she said. If the DDA were to pull its commitment from the Near North project, it’s not as simple as picking another project that comes along. It would take a lot of time to develop another project. The DDA has been familiar with the Near North project for a long time, Smith said. She echoed Clark’s sentiment, however, that the houses need to come down. There’d been problems with people squatting inside them, she said.

Clark then suggested that out of the $500,000 grant, $100,000 be slated specifically for demolition and be paid upfront, not made contingent on a certificate of occupancy or LEED certification. If the project meets the DDA’s goals and the board is already willing to spend the money, then “Let’s have lots, not squatter places.” Lowenstein, who was chairing the meeting, noted that Clark’s suggestion would need to come in the form of an amendment to the resolution.

Smith seconded Clark’s suggestion that the DDA would front the $100,000 to Avalon to carry out the demolition of the houses. Hewitt said he was supportive of the project, but still had the same concern that the board would simply be trusting that everything will be worked out. The board needs better documentation, he said.

Smith asked if the demolition could be incorporated into the terms of the grant contract. Mouat felt it would further complicate what is already very complicated. He felt the board needs to be supportive of the project and make it happen as soon as possible. Adding a condition on the demolition would be another hindrance, he said.

Board member Russ Collins “called the question” on the amendment earmarking $100,000 for demolition of the existing housing on the Near North site.

Outcome on amendment: Clark’s amendment earmarking $100,000 for Avalon to demolish the houses on North Main received support only from one other board member, Russ Collins.

Almost immediately after the vote on the amendment, Gunn called the question on the main resolution.

Outcome on resolution: The board approved the $500,000 grant extension to Avalon, with dissent from Clark, Collins and Hewitt.

Near North Grant: Coda on Calling the Question

At the conclusion of the board meeting, Hieftje asked that the board bylaws be reviewed with respect to the parliamentary procedure of “calling the question,” to ensure that everyone has a chance to speak twice before the question has been called. He said he’d had his hand raised to speak on the Near North question and didn’t get to say something.

By way of background, under Robert’s Rules, the parliamentary move to close debate is actually called “moving the previous question.” More colloquially it’s referred to as “calling the question.” The motion needs a second, then requires a vote with 2/3 majority. The motion itself is not debatable, however.

At Wednesday’s meeting, the calling of the question on both occasions did not receive a vote. When something like this happens, contrary to the rules of procedure, it’s always in order for someone to raise a point of order to insist on the proper administration of the rules. Had Hieftje done so, it’s possible that his desire to speak might have been recognized at that point.

Parking Rates, Enforcement

At the meeting of the DDA board’s operations committee meeting the week before, on Aug. 30, 2011, the committee meeting packet included a set of items proposed to be included as part of the agenda for a joint city council/DDA board working session scheduled for  Nov. 14. The board did not have an item on its Sept. 7 agenda concerning parking rates.

Parking Rates, Enforcement: Background

A recent report in AnnArbor.com left the impression with some readers that a set of items in the Aug. 30 committee materials was already a recommendation of the DDA board. The article did not include the context of the DDA’s April 2010 Parking Report, which is referenced in the committee meeting materials.

That parking report had been produced by the DDA in response to a city council directive, given in late 2009. The city council directive had stemmed directly from a resolution considered by the city council, but not passed at that time, calling for the extension of parking meter enforcement hours.

The city council’s idea to extend evening enforcement hours was part of a strategy to replace revenue that the city had projected for new parking meters the city had wanted to install in areas near the downtown – against the advice of the DDA. The city wound up not installing most of the meters.

The city council’s revenue replacement strategy was put together by Sandi Smith, who is both a city councilmember (representing Ward 1) and a DDA board member. Included as part of Smith’s revenue replacement strategy was the assignment of revenue from two city-owned lots – 415 W. Washington and Fifth & William – directly to the city of Ann Arbor.

Additional context includes a planned joint working session with the city council. At its Aug. 30 meeting, the operations committee discussed items to be proposed to the council at that joint working session. The session, scheduled for Nov. 14, is contractually required as the result of a new agreement struck in May of 2011 under which the DDA manages the city’s public parking system. From the contract:

Joint Working Session. As part of the annual established calendar for City Council Working Sessions, City Council shall designate one working session in the fall of each calendar year as a joint working session with the DDA. The agenda for the working session shall be prepared by the City Administrator in accordance with Council Rules and in consultation with the Executive Director of the DDA. It is recommended that a portion of such agenda be dedicated to a discussion of operations under this Agreement and the utility of creating a joint study committee to address areas of mutual interest.

The timeline for rate increases stipulated in the contract requires three DDA board meetings, over the span of at least two months. The contract calls for announcing and indicating in writing the intent to increase rates at a DDA board meeting. At the next subsequent board meeting, members of the public must have an opportunity to address the board on that issue. And the board is contractually bound not to vote on the rate increase until the board meeting after that.

Based on the assumption that the DDA would not formally proceed with the contractually-stipulated changes to rates or enforcement hours before the council/DDA joint working session on Nov. 14, the DDA board could not take a vote on those changes until its February board meeting. On that scenario, the announcement of intent would come at the board’s December meeting, the public hearing would take place at the January meeting, and a vote could take place at the February meeting.

Parking Rates, Enforcement: Possible Agenda Items

In broad strokes, on Aug. 30 the operations committee was presented with possible items for the Nov. 14 joint working session that fell into two broad categories: hours of enforcement and parking fees. The note on hours of enforcement indicates that a possible item on the working session agenda could be a recommendation to extend the current on-street meter enforcement hours (currently from 8 a.m. to 6 p.m.) to 10 p.m.

The possible agenda items for parking rate changes include: increases in monthly permit parking for some structures and lots; increases in entrance fees to some structures; and increases in miscellaneous categories like art fair and meter bags.

Possible agenda items for rate changes also include adjustment downward of some parking fees, as part of a proposal to set rates based on demand. On-street spaces in highest demand would have a higher rate ($1.80/hour); on-street spaces in lowest demand would have a lower rate ($1.00/hour); and on-street spaces in the middle of the demand range would not have their rates changed.

Demand is defined in terms of the amount of revenue currently brought in by each meter. The pilot program described in the committee’s packet would be implemented in a rectangle bounded by State Street on the east and First Street on the west. Huron and William streets would be the respective north and south boundaries of the pilot program to set meter rates based on demand.

Parking Rates, Enforcement: Public Commentary

Maura Thomson, executive director of the Main Street Area Association (MSAA), addressed some recent talk about proposed changes to parking rates and enforcement hours. Back in late 2009, a resolution was considered by the city council that contemplated evening enforcement hours. [Chronicle reporting from that timeframe includes "City-DDA Parking Deal Possible" and "Most Aspects of Parking Deal Approved"] Thomson reminded the DDA board that in 2009, merchants were vocal in opposition to evening enforcement. [Within hours of the appearance on the city council's agenda of the resolution calling for evening enforcement, the Ann Arbor Area chamber of commerce had fired off a memo in opposition.]

In the wake of that city council discussion [which ultimately did not result in a formal call for evening enforcement], the DDA was then asked to come up with a plan. Thomson said that the MSAA was involved in that work through participation in focus groups. The MSAA had also surveyed its membership, Thomson said. She indicated that there was overwhelming opposition to extending enforcement hours. There was also a sentiment that some kind of free parking component needs to be included. She said it feels like “we’re back to where we started.” Part of the balance of higher rates and longer enforcement hours outlined in the April 2010 parking report produced by the DDA is a free parking component as part of the demand management strategy, Thomson said.

Thompson was alluding specifically to a passage from the April 2010 report that reads:

Free structure parking is being used in other Michigan cities with mixed use downtowns, as the offer of free is very attractive and easily understood. The DDA believes that every parking space has value, but if used correctly, using this pricing strategy may lessen demand at the meters and extend parking more broadly throughout the system.

Thomson asked the DDA board to consider that aspect of the plan – it allows for a positive communications strategy. She was dismissive of a free parking component based on the hours of enforcement early in the morning [also discussed in the report]. If we’re all being honest, she said, the free component from 8-9 a.m. has no correlation to evening enforcement. She compared that strategy to saying that enforcement of meters from 6-8 a.m. would have a positive impact on parking revenue. So she asked that “truly free” parking be tied into any plan to extend hours of enforcement.

Tom Murray introduced himself as a member of the MSAA and owner of Conor O’Neill’s on Main Street. He warned that if the DDA enacts the plan as currently discussed, people will go elsewhere for entertainment. Addressing the issue of employee parking in the evening, Murray said that the DDA was directed to provide a plan to communicate specific options for evening employees. But the discussion from the last committee meeting the previous week didn’t indicate any specific options, Murray said.

Murray ventured that his staff would continue to find a way to get outside and feed the meters. Customers, on the other hand, won’t go outside and they’ll receive tickets – that will become a problem. Murray said that when we read about employees, we forget that employees are also customers. We need to incentivize employees, not punish them. A truly free parking component needs to be explored, Murray said.

Murray encouraged the DDA to find creative ways to reach out to employees. Employees would take advantage of alternatives if they are safe and affordable, he said. He also suggested that the entire program should be on a pilot basis, not just the meter rate schedule. The plan current under consideration hurts downtown, Murray concluded.

Addressing the board at the time for public commentary at the end of the meeting, Jessica Johnston of Falling Water on Main Street asked the board to reconsider any decision to extend hours of parking enforcement. Based on face-to-face interaction with her customers, she told the board there would be a negative reaction to it. The downtown economy is already fragile, she cautioned, and she ventured that the dinner crowd could be eliminated by the proposal.

As part of his report from the Downtown Citizens Advisory Council, Ray Detter said the advisory council continues to support the DDA’s effort to implement parking/transportation demand management. He said some of the things in the media he’d read were not terribly accurate. He stated that the advisory council had always assumed that the possibility of extending hours would include a free component.

At the start of public commentary, Joan Lowenstein, who was chairing the meeting, had stressed that public commentary is not the occasion for a back-and-forth kind of thing. However, board members do sometimes use their own time at the board table to respond to concerns raised during public commentary.

And in response to the public commentary, board member Roger Hewitt stressed that the operations committee meeting had been the start of a discussion – he appreciated the input from the public. Hewitt said he felt the way the proposal had been characterized in media reports was unfortunate.

Naming Guenzel Chair, Thanking Boren

On the agenda were resolutions to name Bob Guenzel as board chair and Leah Gunn as vice chair, and to thank Gary Boren for his service on the board. [Guenzel did not attend the board's meeting.]

Naming Guenzel, Thanking Boren: Background

The board had been without a chair because board member Gary Boren, who had been elected to that post by his board colleagues at their July 6, 2011 meeting, was not nominated by mayor John Hieftje for reappointment. Boren’s term expired on July 31. Boren was replaced on the board by local attorney Nader Nassif.

Guenzel, who retired last year as Washtenaw County administrator, was elected vice chair of the board at the July meeting. Gunn’s other public service currently includes representing District 9 on the Washtenaw County board of commissioners.

The evening before the DDA’s board meeting, at the Sept. 6 city council meeting, three nominations to the DDA board were on the agenda for confirmation: Joan Lowenstein (reappointment), John Mouat (reappointment), and Nader Nassif (new appointment replacing Boren). The nominations had been announced at the council’s previous meeting, on Aug. 15.

At the council’s Sept. 6 meeting, Stephen Kunselman (Ward 3) made the rare request that the council’s confirmation of the mayoral nominations be done separately on roll call votes for each nominee. The votes on the appointments of Mouat and Nassif were unanimous. However, Kunselman voted against the reappointment of Lowenstein. All other councilmembers present voted for her.

Naming Guenzel, Thanking Boren: Board Deliberations

At the DDA board’s Sept. 7 meeting, Newcombe Clark noted that the board is tasked by its bylaws to elect officers at the July annual meeting. [That has historically come before the mayor has chosen to announce whether he would be reappointing board members whose terms were expiring later in the month.] Clark reminded board members that he’d raised the issue at the last two annual meetings. From The Chronicle’s report of the 2011 annual meeting:

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

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

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

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

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

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

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

At Wednesday’s meeting, Clark stated that he would like to see the bylaws adjusted so that officer elections are not held until after the status of reappointments is known. Otherwise, he said, board members are being asked to vote for chair and vice chair without knowing if they’ll continue on the board. Nothing is lost and a lot is gained by making the change, Clark said. He stated that he wanted formally to ask the executive committee to look into it: “We owe each other more than this.”

Outcome: The board unanimously approved the resolution thanking Gary Boren for his service, as well as the resolution naming Bob Guenzel chair of the board. Boren, who attended the meeting to receive the recognition from his colleagues, made his way around the table and shook hands with the board members.

County Economic Development Tax

The board was asked to consider a resolution urging the Washtenaw County board of commissioners to use Act 88 of 1913 to levy a tax in support of economic development in the county. A public hearing on the tax was scheduled for the county board’s meeting later that evening.

At its Aug. 15 meeting, the Ann Arbor city council passed a similar measure urging county commissioners to levy the tax.

For the last two years, the county board has levied the tax. It has previously used a rate of 0.043 mill. (One mill is $1 for every $1,000 of a property’s taxable value.) This year, the county board is contemplating a millage rate of 0.05 mills. Because Act 88 predates the state’s Headlee legislation, the county board does not need to put the issue before voters in order to levy the tax. The county board could, by the Act 88 statute, levy such a tax up to 0.5 mills, or 10 times the amount it is considering for next year.

The Act 88 tax received initial approval by a 7-3 vote at the county board’s Sept. 7 meeting. The three commissioners voting against it were Alicia Ping (R-District 3), Wes Prater (D-District 4) and Dan Smith (R-District 2). Commissioner Ronnie Peterson was absent. A final vote is expected on Sept. 21.

The anticipated $688,913 in millage proceeds will be allocated to several local entities: Ann Arbor SPARK ($230,000), SPARK East business incubator ($50,000), the county’s dept. of community & economic development ($131,149), Eastern Leaders Group ($100,000), promotion of heritage tourism ($65,264), Food System Economic Partnership (FSEP – $15,000), Washtenaw 4-H, operated by the Michigan State University Extension program ($82,500) and Washtenaw Farm Council 4-H Youth Show ($15,000).

During the brief DDA board deliberations on the resolution, Leah Gunn, who also serves as a county commissioner, indicated that it was “very small millage,” that would cost $5.38/year for the average homeowner. It supports important economic development efforts like Ann Arbor SPARK and agriculture, she said. Gunn told her DDA board colleagues that she would appreciate them voting for it, so that she could take it to the county board of commissioners meeting later that evening.

Outcome: The DDA board voted unanimously in favor of the resolution urging the county board to levy the economic development tax.

RiverUp!

Before the board was a resolution expressing support of RiverUp!, a collaborative effort among several organizations – including the Huron River Watershed Council, the National Wildlife Federation, and the Michigan League of Conservation Voters – to improve the Huron River corridor.

The resolution states that the DDA will assist in wayfinding efforts that would help connect the river with visitors to the downtown, but it does not specify a budget for that effort. [For background on the RiverUp! initiative, see Chronicle coverage: "RiverUp! Focuses on Revitalizing Huron River"]

During board deliberations, mayor John Hieftje stressed that he’s been involved with the RiverUp! project since the beginning and expressed his support for the resolution.

John Mouat questioned the project’s relevance to the DDA. He said as much as he wished it did, the Huron River doesn’t flow through Ann Arbor’s DDA district. What caused him concern, he said, is when something becomes “a bit of a stretch” and he wanted to voice that as a general concern. He wanted to know specifically how support of the DDA board adds to the project.

Sandi Smith pointed out the focus on wayfinding in the DDA’s resolution. She said her thought in bringing forward the resolution is that a University of Michigan freshman might be standing on campus and not know about the recreation amenity just 3/4 mile to the north. She allowed that the DDA can’t relocate the downtown to the river, but it’s also important not to forget that it’s there.

Outcome: The DDA board voted unanimously in favor of the resolution expressing support of RiverUp!

Communications, Committee Reports

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

Comm/Comm: The Varsity, Alleys

Ray Detter reported out from the Downtown Citizens Advisory Council, which meets monthly on the evening just before the DDA board meetings. He noted that The Varsity at Ann Arbor would be coming before the planning commission on Sept. 20. [The Varsity is a proposed 13-story, 173-unit, 178,380-square-foot apartment building for approximately 418 students. It would include 77 parking spaces, and would replace the two-story office building and parking lot currently on the site, located on Washington Street, just west of the First Baptist Church.]

Detter said that the advisory council would continue to support the city’s newly enacted downtown design guidelines – the advisory council doesn’t oppose The Varsity. He reported that members of the advisory council had attended the design board review meeting for The Varsity, as well as the citizen participation meeting, and offered their suggestions. Detter said that in response to feedback, the developer had made some changes, but had not really addressed the issue of the view from East Huron Street.

Detter praised the work that the developer had done with the First Baptist Church, which had resulted in plans for a walkway connecting East Huron and Washington Street.

Detter said the hope was that the south entrance to that walkway on Washington would connect to the alley that runs between Washington and Liberty. That alley, Detter said, has been allowed to turn into a place for smelly dumpsters and urinating panhandlers. Detter reported that the advisory council had met with DDA executive director Susan Pollay, assistant city attorney Kevin McDonald, interim city administrator Tom Crawford and mayor John Hieftje.

As a result, Detter reported, that group has moved ahead to form a committee to develop a plan for the alley. Some of the goals are to get better placement of the dumpsters, add awnings, and install better lighting. He expressed the hope that it could be turned from a dangerous, dirty, disgraceful alley into an asset.

Comm/Comm: Downtown Parcels

As part of the report from the board’s partnerships committee, Sandi Smith reported that the committee continues to discuss how the DDA will implement a city council directive to explore alternate uses of some city-owned parcels in the downtown. Smith stressed that the idea is to build on all the work that’s come before, not to recreate everything.

Amber Miller, the DDA’s planning and research specialist, had sketched out a draft of a process, to which committee members had responded favorably. It involved two parallel tracks – a technical component and a community outreach component. Doug Kelbaugh, former dean of the University of Michigan’s college of architecture and urban planning, and Kit McCullough, who teaches at the college, attended the partnerships committee meeting. They’d previously pitched their services to the DDA to facilitate a public engagement process.

The two UM architecture faculty were receptive to Miller’s sketch and suggested that they could develop a “road show” as a presentation that could be delivered by DDA staff or some other person on multiple occasions to different community groups. The conversation about the alternative use of downtown parcels was to continue at the committee’s next meeting on Sept. 14.

Comm/Comm: Regular Parking Report

Roger Hewitt delivered highlights from the monthly parking report from July: hourly patrons were down 5%, revenues up 2%. Art fair revenue was down about $5,000 (2%) compared to last year. Hewitt said the weather had an impact, but the horrible, hot temperatures had put a smaller dent in revenues than he’d been anticipating. Responding to a question from John Mouat, Hewitt said the revenue from art fair parking is not budgeted separately. Russ Collins called the $5,000 variance not significant. Hewitt agreed that it’s “a drop in the bucket.”

Comm/Comm: Unaudited FY 2011 Budget Numbers

Roger Hewitt pointed to the unaudited financial statements from the end of the 2011 fiscal year. He noted that by state law the DDA has to amend its budget every year to reflect the best estimate of where the organization stands financially. The audit is in process now, and the DDA expects that the numbers will be the same at the end of the audit.

Of the items that Hewitt ticked through, the scaling back of expenditures on parking maintenance drew scrutiny from board member Newcombe Clark. He wanted to know if the amount reflected an additional revised downward expenditure on maintenance. Yes, answered Hewitt, but the reduced maintenance activity was still within the DDA’s engineering consultant’s recommendations.

Clark noted that painting is cosmetic unless you don’t do it for several years – then it becomes structural. Hewitt assured Clark that over a 10-year period, the DDA would spend the same amount it had originally planned. Hewitt described the DDA’s approach to maintenance as “fanatical,” so felt like the DDA was in very good shape with respect to the maintenance issue.

Hewitt noted that the fund balance had decreased considerably from a high of around $20 million several years ago and the DDA had spent down a good deal of it. Those numbers would continue to go down, he said.

Comm/Comm: go!pass

John Mouat reported that the getDowntown advisory board had advised increasing the cost of go!passes to employers from $5 to $10. With the popularity of the program, all of the funds had been expended, he said. However, the Ann Arbor Transportation Authority (AATA) had passed a resolution at its last meeting adjusting the price it charges for go!pass rides over the next two years to calibrate it to the amount already pledged by the DDA for that period. That led Mouat to conclude that: “We’re covered for go!passes.” [For detailed Chronicle coverage of the go!pass AATA funding decision, see "AATA Reduces Charge for go!pass Rides"]

Comm/Comm: Bicycle Parking

John Mouat gave an update on information about bicycle parking downtown, provided by a DDA summer intern. Highlights included: 1,000 bike parking spaces downtown; 83% of bikes parked are locked to hoops instead of lampposts; the bicycle map has been updated; the last of new vegetable-shaped hoops have been installed at the farmers market.

Comm/Comm: Construction Updates

John Splitt reported that the Fifth and Division streetscape improvement project is mostly complete, except for the 300 block of South Fifth Avenue – that section will need to wait until construction of the underground parking structure on South Fifth is further along. On the 200 block of South Fifth, just some lampposts remain to be installed.

The underground parking structure site along Fifth Avenue is now is getting very busy, Splitt reported. Waterproofing work is being done on the east dog-leg side of the project. Columns and slabs are getting poured in the other two phases – the middle and the Fifth Avenue side. [The project is being built from east to west.]

Comm/Comm: State of the Downtown Report

At the board meeting, the previous release of the DDA’s State of the Downtown Report was acknowledged. The report features a raft of statistical information about the DDA district, including acreage, building square footage by category, population trends, real estate occupancy rates, crime trends, and the like. Interspersed through the text are photos, including a cover photo by Seth McCubbin.

Present: Nader Nassif, Newcombe Clark, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Joan Lowenstein, John Mouat

Absent: Keith Orr, Bob Guenzel

Next board meeting: Noon on Wednesday, Oct. 5, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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