The council’s unanimous vote to postpone consideration of the lease agreement came at its Aug. 18, 2014 meeting, after a brief discussion. The council will take up the item again at its first meeting in October – on Oct. 6. The lease came to the council with a recommendation of approval from the park advisory commission, given at its July 15, 2014 meeting. The council now wants PAC to take another look at the agreement.

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

The existing lease expires on Aug. 31, 2014. Given that the lease is expiring, Jane Lumm (Ward 2) asked about the implications of postponing until October. Mayor John Hieftje indicated that the lease renewal came to the council later than it should have.

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

The city has leased Lot A to UM since 1993. Lots B and C have been leased since 2009.

Annual revenue of this lease would be $78,665, and will be included as part of the parks and recreation general fund budget. [.pdf of proposed lease agreement] [.pdf of staff report]

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

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

At PAC’s July 15 meeting when the lease was recommended, parks and recreation manager Colin Smith noted that the revenue from these three lots is significant for the parks and recreation operating budget. The current agreement – which was approved by the council in 2009 and extended by two administrative renewals – is essentially the same as the agreement that will expire, Smith told PAC.

The main purpose of the lots is for the parks, Smith explained. That’s reflected in the hours when UM can use the lots – on weekdays, prior to 4-5 p.m. The outdoor pool and soccer fields don’t need the quantity of parking during the winter or off-season. “It’s an asset within the parks department that we can either have sit there, or we can lease it for a significant amount of revenue that obviously helps us provide other programs,” he said. If the city doesn’t lease those parking lots, “I am absolutely certain that people will park in it anyway,” Smith added.

Two residents who had raised concerns about the lease at PAC’s July 15 meeting – Rita Mitchell and George Gaston – also addressed the city council on the same issue on Aug. 18. Their commentary is reported in The Chronicle’s live updates of that meeting.

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

Comparing the periods October 2012 through June 2012 to October 2013 through June 2014 – when rates have been constant – revenue has increased 1.20% to $14,647,274, while the number of hourly patrons has decreased by 1.65% to 1,661,256. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

What if on-street metered rates were raised a dime, and rates across other parts of the parking system were also raised by an equivalent percentage?

Although the DDA operates the parking system, that kind of 6.7% rate increase would directly benefit the city’s general fund. By how much?

First, any increase to the city’s general fund revenue is a function of the contract with the city of Ann Arbor, under which the DDA operates the roughly 8,000-space public parking system. The contract stipulates that the city receives 17% of gross parking system revenues.

Total parking system revenues are budgeted by the DDA for the 2015 fiscal year at about $19.3 million. So in ballpark numbers, the 17% equates to a roughly $3.2 million transfer to the city. Of that $3.2 million, about $2.3 million will go to the general fund, while the remaining amount will go to the fund the city uses to maintain downtown streets. That division of the transfer payment by the city has its historical roots in an arrangement between the city and the DDA that predated the existing contract.

So a 6.7% increase in rates across the parking system – assuming no decrease in the use of the system – works out to something like $150,000 more for the city of Ann Arbor’s general fund.

The city council’s role in setting parking rates is one of oversight, not decision-making. But even that oversight role is structurally somewhat weak – because decisions made by the DDA (to raise parking rates) can make the city council’s annual budget decisions somewhat easier.

The next scheduled opportunity for the Ann Arbor city council to exercise oversight of the DDA will be during a fall joint work session – which is stipulated to occur under terms of the city-DDA parking contract. That session is currently planned for Sept. 8.

The contractually stipulated work session would be a good opportunity for councilmembers to ask for metrics on Ann Arbor’s public parking system. Requested information should include stats that indicate how well Ann Arbor’s public parking system supports three different key user groups: (1) downtown employees; (2) retail/transactional customers and visitors; and (3) downtown residents.

Some data is collected routinely by the DDA from Republic Parking – its contractor for day-to-day operations – and shared publicly. That data is limited to revenue figures and numbers of hourly patrons. The routine data does not include hours parked by different categories of users – monthly permit holders and hourly patrons – which makes it difficult to evaluate the system’s support of different user groups.

Still, it’s possible to discern some patterns and to draw some conclusions about Ann Arbor’s parking system, based on the data the DDA does provide. Charts with commentary are presented below.

Overall Picture

The most recent rate increases in Ann Arbor’s public parking system were implemented in September 2012.

Rates for the roughly 2,000 on-street metered parking spaces are currently $1.50 an hour. Rates at surface lots straddle that $1.50 hourly rate – at $1.40 for the first three hours and $1.60 for the fourth hour and beyond. Hourly parking at parking structures costs $1.20 per hour. Monthly permits – which don’t guarantee a permit holder a specific space, but are tied to a particular structure – cost $145 a month at most structures.

Some, but not nearly all, of the monthly permits sold in the two-year-old underground parking garage at Library Lane were initially sold at a discounted $95 introductory rate, which reflects a $50 savings over most other structures. The discount was offered to employees of “new-to-downtown businesses” and to permit holders in the Maynard or Liberty Square parking structures who were willing to transfer their permit to Library Lane. The pricing is good through August 2014. Assuming all those discounted Library Lane permit holders retain them after August 2014, revenue per space at Library Lane should show a slight increase.

The most recent revenue data from the Ann Arbor DDA on Ann Arbor’s parking system is through June 30, or the end of the fiscal year 2014. The most recent three fiscal quarters provide the most meaningful year-over-year comparison – because of the rate increase that was implemented in September 2012.

The most recent data is consistent with the parking reports over the last several years, when interpreting the data has required accommodation of rate increases: Revenue has increased even while the number of patrons who pay the hourly rate in structures or on surface lots has decreased. Hourly patrons don’t include those who park at on-street meters. Specifically, comparing the last three quarters of the most recent fiscal year to the last three quarters of the previous fiscal year, revenue has increased 1.20% to $14,647,274, while the number of hourly patrons has decreased by 1.65% to 1,661,256.

In Chart 1 and Chart 2 below, the recently concluded fiscal year 2014 is indicated in dark purple.

Chart 1: Total System Revenue. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Chart 2: Total Count of Hourly Patrons. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Monthly Permits: Are Fewer Hourly Patrons Staying Longer?

The consistent narrative offered by the DDA to account for the increase in revenues – despite a decreased number of hourly patrons – has been told along the following lines: Even though fewer hourly patrons are visiting downtown, they are parking for a longer time.

It’s possible to ask two basic questions about that narrative: (1) Is it meaningful? and (2) Is it accurate?

In order for the narrative to be meaningful, it’s important to understand how hourly patrons are using the parking system. If hourly patrons are exclusively retail shoppers of some stripe, then the fact that retail shoppers are staying in the downtown longer now than they were in the past could be analyzed as good news for downtown retail establishments. On the other hand, if hourly patrons include a significant number of downtown employees – people who would prefer to hold a monthly permit, but who have been languishing on the wait list – then this might indicate that employees are crowding out retail shoppers.

In order test the narrative for accuracy, it’s important to recognize that hourly patrons are not the only source of revenue to the parking system as a whole. For example, on-street metered parking by itself provided about $3 million of revenue in the most recent three fiscal quarters – but that that type of parking does not contribute to the count of hourly patrons. If the revenue from parking meters and bags is subtracted from the total revenue figure, there’s still an increase – in fact, a greater percentage increase than across total revenues. The $11,529,132 collected for the nine months from October 2013 through June 2014 is about 2% more than was collected from October 2012 through June 2013.

Chart 3 below shows clearly that if on-street metered parking is considered as a facility, then it easily generates the highest gross revenue of any facility in the system.

Chart 3: Revenue by Facility. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

It is not as straightforward to test the DDA narrative for accuracy with respect to facilities that offer monthly permits as well as hourly parking – where those hourly patrons are counted. The revenue division between monthly permits and hourly patrons is not reported and apparently not analyzed by the DDA. So some of the total revenue increase might be attributable to increased optimization of the oversell margin for monthly permits in parking structures. Many structures show more monthly permits sold than they have spaces. The number of monthly permits sold in the entire system, as well as the percentage of the total inventory, shows a slight but clear upward trend over the last three years.

The DDA does not report monthly permit data broken down by permit type – regular, evening/overnight or premium – which might otherwise help to identify how well users of the public parking system are being served.

Monthly permit data is presented in Charts 4, 5 and 6 below.

Chart 4: Permits as Percentage of Inventory by Facility. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Chart 5: Total Inventory and Total Permits. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Chart 6: Monthly Permits as Percent of Inventory. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

For some facilities – like the surface lots at Huron/Ashley/First (the Brown Block) and at South Ashley (the Kline Lot) – no monthly permits are sold. So it’s possible to calculate average payments per patron at those facilities. And both of those facilities show evidence that a fewer number of patrons are generating more revenue, and that their average stay has become slightly longer.

Average payments per patron for Huron/Ashley/First and the Kline Lot are presented below in Charts 7 and 8.

Chart 7: Huron/Ashley/First Average Payment Per Patron. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Chart 8: Kline Lot Average Payment Per Patron.  (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Revenue Per Space

The DDA does not calculate revenue-per-space figures. And the DDA has reduced the frequency of its reporting about the number of spaces at a facility – from monthly to quarterly. So the charts below are constructed based on estimates, using previous number spaces. In any case, most facilities have a stable number of spaces and vary at most by a handful, due to special temporary circumstances.

A couple of clear patterns emerge from the plots of revenue-per-space figures. One is that easily the highest revenue per space (though not per acre of land) is generated by the two surface lots on the west edge of downtown – Huron/Ashley/First and the Kline Lot.

Another trend is that the new Library Lane underground parking garage appears to have achieved a kind of equilibrium in its usage. Library Lane has settled in a bit higher than the lowest performing significant facility in the system in terms of the revenue-per-space metric – which is the on-street metered facility. Library Lane achieved what appears to be its current stable level of usage within nine months of opening.

The on-street facility shows a clear bump for April this year. That coincides with the closing of the Fifth and William surface lot, after it was purchased from the city by Dennis Dahlmann. However, it’s not clear what caused the April increase in revenue to the on-street metered system.

Chart 9: Revenue per Space, Focus on Structures. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Chart 10: Revenue per Space, Focus on Surface Lots. (City of Ann Arbor public parking system data from the Ann Arbor Downtown Development Authority, charts by The Chronicle.)

Conclusions

Given the kind of parking data currently collected, analyzed and reported by the DDA, it’s not possible to get a very clear understanding of how Ann Arbor’s public parking system is currently supporting three different key user groups: (1) downtown employees; (2) retail/transactional customers and visitors; and (3) downtown residents.

The DDA could improve its understanding of the system by collecting, analyzing and reporting data on hours parked by monthly permit holders as compared to hourly patrons. The hours parked by permit holders should be further broken down by permit type. The DDA could also improve its understanding of the on-street metered system by collecting, analyzing and reporting usage by individual meter – a straightforward possibility at least for those meters that are paid for using the relatively new kiosks.

Certainly there are other fiscal policy issues at stake as the DDA evaluates whether parking rates should be increased. For example, are current revenue levels adequate to pay for existing debt on past construction, the go!pass bus pass program, ongoing maintenance and a possibly $5 million renovation to the Fourth and William Structure? In its oversight role, the city council should certainly include consideration of these basic financial issues.

I’m reasonably confident that the council will exercise appropriate oversight with respect to the purely financial question: Will there be enough money and how much does the city get?

But without a clearer understanding of how the parking system supports different user groups, it will not be possible to measure the impact of a price increase on those user groups.

So at the joint city council-DDA work session on Sept. 8, I hope the city council will include in their oversight role a request for data and metrics that will help answer this question: How does Ann Arbor’s parking system actually work?

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]

Left to right: Ann Arbor mayor John Hieftje and Ann Arbor downtown development authority board members Leah Gunn and Nader Nassif. (Photos by the writer.)

The difference will be covered from the existing fund balance. The use of fund balance, in the current year and in the coming year, was planned as part of the construction of a new underground parking structure on South Fifth Avenue, and a new contract with the city of Ann Arbor, ratified in May of 2011. The contract, under which the DDA manages the city’s public parking system, pays the city of Ann Arbor 17% of gross revenues from the parking system.

At the end of FY 2013, the DDA expects to have a total fund balance of $4.38 million, or an amount equal to about 18.2% of expenses.

In its other main business item, the board authorized a budget of $100,000 for its Connecting William Street project, which it’s undertaking at the direction of the Ann Arbor city council. The council passed a resolution on April 4, 2011 that gave the DDA direction to explore alternative uses of city-owned parcels – currently used for surface parking – in a limited area of downtown. The area is bounded by Ashley, Division, Liberty and William streets.

Parcels included in the area are: the Kline’s lot (on Ashley, north of William), Palio’s lot (at Main & William), the ground floor of the Fourth & William parking structure, the old Y lot (Fifth & William), and the top of the Fifth Avenue underground parking garage, which is nearing completion.

Of the budgeted amount, $65,000 will come from a community challenge grant awarded recently as part of a larger $3 million grant awarded to Washtenaw County by the U.S. Dept. of Housing and Urban Development. The remaining $35,000 will be made up by DDA cash (no more than $20,000) and DDA in-kind contributions of staff time.

Toward the end of Wednesday’s meeting, the board also entertained some discussion about parking meter bags. The bags placed over on-street parking meters to designate the spots as unusable, so that streets are free of parked cars for construction projects or special events. The meter bag discussion came in the context of a request on behalf of FestiFools and conveyed by mayor John Hieftje, who sits on the DDA board. The request was to waive fees ordinarily associated with the meter bag placement for the April 1 FestiFools parade in downtown Ann Arbor.

One possible approach includes the creation of a parking meter puppet.

FY 2013 Budget

At its March 7 meeting, the board was asked to approve its fiscal year 2013 budget. Across all funds, the budget shows anticipated expenses revenues of $22,097,956 against $24,101,692 in expenditures – for an excess of expenditures over revenues of $2,003,736. The difference will be covered from the existing fund balance.

The shortfall was planned. It’s in the context of construction of a new underground parking structure on South Fifth Avenue, and a new contract with the city of Ann Arbor, ratified in May of 2011, under which the DDA manages the city’s public parking system. That contract pays the city of Ann Arbor 17% of gross revenues from the parking system, which are budgeted in FY 2103 at $18.1 million. The 17% translates to a ballpark figure of $3 million.

Factoring in coverage of this year’s (FY 2012) use of fund balance and FY 2013′s planned use of $2 million, the DDA will have a total fund balance of $4.38 million at the end of FY 2013, or an amount equal to about 18.2% of expenses. [.pdf of FY 2013 budget]

FY 2013 Budget: Deliberations

John Splitt reviewed the budget for the board, relying on the combined fund summary. [.pdf of FY 2013 DDA budget documents]

By way of background, the DDA’s accounting system includes four funds: the TIF (tax increment finance) fund, the housing fund, the parking fund and the parking maintenance fund. The TIF fund receives revenue from the taxes that are “captured” in the tax increment finance district defined in downtown Ann Arbor. The DDA receives taxes on the increment between the baseline value of property and the value of property after new construction. The DDA does not capture increases in value due to inflation. The housing fund receives revenue through transfers from the TIF fund.

The parking fund receives revenues from Ann Arbor’s public parking system, which the DDA manages under contract with the city. The contract, which was renewed in May 2011, calls for the city of Ann Arbor to receive 17% of gross parking revenues. The DDA contracts for day-to-day operations of the parking system with Republic Parking. The parking maintenance fund receives revenue through transfers from the parking fund.

Highlights of Splitt’s budget review included TIF income of $3,957,012. On the expense side, salaries and fringe benefits paid out of the TIF fund are basically split evenly, he explained, between the TIF and parking funds. That comes to roughly $152,000 for salaries and $95,000 for fringe benefits from each fund. [The DDA has four full-time employees– an executive director, a deputy director, a planning and research specialist, and a management assistant.]

Administrative expenses – $157,119 for the TIF fund and $90,292 for the parking fund – were described by Splitt as all the “office costs.” The professional services of $155,000 for the TIF fund and $85,500 for the parking fund will pay for architects, attorneys and consultants. Holiday lights and sidewalk repairs are budgeted for $130,000 of the TIF fund – it’s something the DDA does every year, Splitt noted. Another TIF fund line item is $508,000, which is an annual amount that the DDA pays toward the bond payments for the city of Ann Arbor’s new police/court building. The budget also includes $100,000 for the DDA’s energy grant program.

Another TIF fund line item for $200,000 – labeled “capital costs” – was described by Splitt as including sidewalk ramp installation for compliance with the Americans with Disabilities Act (ADA). Of the $3,081,896 in bond payments to be made out of the TIF fund, $2.25 million is for the new underground parking garage on South Fifth Avenue, due for completion sometime this spring.

For the housing fund, Splitt highlighted the two $400,000 line items (for a total of $800,000) that would be spent on Avalon Housing’s Near North project on North Main Street, and Village Green’s City Apartments project at First and Washington. In addition to support for the affordable housing units that are part of the City Apartments project, the DDA is financing the construction of the first two floors of the development, which will contain a public parking deck. The deck will be owned by the city of Ann Arbor.

Splitt said he didn’t know how likely it would be that those grants would need to be paid during the FY 2013 year, but it’s not impossible, he said, so the items are being included in the budget. [Neither project has begun construction, but the City Apartments project is poised to begin, with construction equipment on site.]

For the parking fund, the revenue estimate for FY 2013 is $18,104,916. That’s based on essentially flat growth but some additional usage, Splitt said – perhaps 1/4 or 1/3 usage of the new underground parking garage, set to open this spring. There will also be a parking rate increase set to take effect in September, he said, so the budget factors in 10 months worth of that rate increase. He characterized it as a “reasonable and conservative” estimate.

Out of parking revenue, it’s anticipated that the contract with Republic Parking will cost $6,298,423. The 17% of gross to be paid to the city of Ann Arbor is estimated to be $3,139,795. Also paid out of the parking fund is a $500,000 transfer to the parking maintenance fund and $590,060 to support alternative transportation in the form of the go!pass program.

A capital cost for the parking fund of $1,588,235 was described as a downpayment for parking at the First and Washington development. Bond payments from the parking fund total $3,613,759 across all the various parking structures, Splitt said. Of that amount, $700,000 is for the First and Washington structure. It’s not clear whether that amount will need to be paid in this budget year, he said.

For the parking maintenance fund, Splitt pointed to the $1,696,350 estimated expense, an amount derived from an estimate of the DDA’s parking structure engineering consultant, Carl Walker. The structures are in such outstanding condition, Splitt said, that it’s not anticipated that all the money would be spent, but it would be budgeted nonetheless.

Summarizing across all funds, Splitt said, the DDA is spending roughly $2 million more than its anticipated revenues. Estimated balances for each of the funds at the end of the year are: TIF – $2.9 million; housing – $0.3 million; parking – $0.735 million; and parking maintenance – $0.465 million. That leaves a total fund balance of $4.387 million at the end of FY 2013, Splitt concluded.

Russ Collins commented that FY 2013 is the “nadir” of the projected financial picture. He was alluding to the fact that the DDA anticipated tight budgets for a certain period, in the wake of the new parking garage construction and the new parking contract with the city of Ann Arbor, but after that the DDA would be in less of a financial crunch.

Sandi Smith sought some clarification of the arithmetic for the fund balances – the numbers included in the budget sheet show existing fund balances from June 30, 2011, but did not show the use of fund balance for the current fiscal year, FY 2012.

Newcombe Clark noted that there are conservative “hedges” built into the budget – the need to pay out $800,000 from the housing fund and the estimate of usage for the new parking deck. He wanted to know if the operations committee had thoughts about how to proceed if the scenarios underlying those hedges did not materialize in a year or so. Would the advice be to pursue additional projects or to let that accumulate to the fund balance? Splitt indicated that he felt it would be better to hold on to the reserves at this point, until the DDA is very comfortable with its reserve level.

Mayor John Hieftje asked if the forecasted TIF revenues included new projects that were anticipated being built within the DDA district, which would increase the amount of tax captured by the DDA. Joe Morehouse, deputy director of the DDA, explained that the DDA uses a standard 2% increase per year projection for forecasting. Once taxes begin to be captured after a project is complete, they’re added in to the total.

Hieftje said he felt it’s important to say that the use of fund balance that the DDA is making this year has been planned for a long time. Splitt concurred, saying that the money the DDA is using from its reserves is what it expected to use.

Outcome: The DDA board voted unanimously to approve its FY 2013 budget.

Downtown Parcel Planning Budget

The board was asked to establish a budget of $100,000 for its Connecting William Street project, which it’s undertaking at the direction of the Ann Arbor city council.

Downtown Parcel Planning: Background

The council passed a resolution on April 4, 2011 that gave the DDA direction to explore alternative uses of city-owned parcels – currently used for surface parking – in a limited area of downtown. The area is bounded by Ashley, Division, Liberty and William streets.

Parcels included in the area are: the Kline’s lot (on Ashley, north of William), Palio’s lot (Main & William), the ground floor of the Fourth & William parking structure, the old Y lot (Fifth & William), and the top of the South Fifth Avenue underground parking garage, which is nearing completion.

Of the budgeted amount, $65,000 will come from a community challenge grant awarded recently as part of a larger $3 million grant awarded to Washtenaw County by the U.S. Dept. of Housing and Urban Development. The remaining $35,000 will be made up by DDA cash (no more than $20,000) and DDA in-kind contributions of staff time.

The committee that has been shepherding the project along since the summer of 2011 recently released an online survey to solicit initial community feedback.

Downtown Parcel Planning: Deliberations

Joan Lowenstein reported on the Connecting William Street project, saying it’s pretty much on schedule. The survey has 1,500 responses so far. With the passage of the resolution, the project could move to its next phrase, to look at the land use and economics.

Newcombe Clark wanted to know if the $100,000 figure was matched to proposals from consultants. He was concerned that when the $100,000 figure is put out there, suddenly the cost of consulting becomes $100,000. Lowenstein indicated that the consultant had been selected already. [The consultant identified is SmithGroupJJR.] She noted that the DDA cash amount is “not to exceed” $20,000.

Amber Miller, planning and research specialist with the DDA, explained that the project budget was the same one used in the application that the DDA had made in coordination with Washtenaw County for a community challenge grant awarded by the U.S. Dept. of Housing and Urban Development.

Clark noted that the resolution the board was being asked to consider authorized negotiation of the consultant contract at the committee chair level:

RESOLVED, The DDA Partnerships/Economic Development Committee Chairs are authorized to negotiate and approve contracts relating to this project including a grant contract with the County and the selection of consultants as needed.

Clark wanted to know if the consulting contract had been signed – no, he was told. Clark offered a “friendly set of eyes” to look at the contract before it’s signed, which seemed amenable to Lowenstein and other board members.

Earlier in the meeting, during his report from the Downtown Citizens Advisory Council, Ray Detter said that the CAC always respects and supports careful community planning. So at the CAC meeting the previous evening, he reported that members had participated in the Connecting William Street survey. The CAC had been joined by Skyline High School students who were satisfying a course requirement – in connection with the survey, they’d made a plea for more stuff for young people in the downtown.

Outcome: The board voted unanimously to approve the Connecting William Street project budget.

Parking

Parking is common topic for every DDA board meeting, even if there is no board business requiring a vote on it.

Parking: Monthly Numbers

In Roger Hewitt’s absence, John Splitt gave commentary on monthly parking numbers. Comparing January 2012 to January 2011, Splitt noted that revenue-wise it was a good month this year – up 17% [$1,358,935 in January 2012 compared to January 2011 at $1,161,632]. Splitt attributed the change to a rate increase and outstanding weather. He hoped for the same kind of results for February.

Not discussed by the board was the performance of the parking system measured by the number of hourly patrons – it was also up compared to a year ago. In January 2011 the parking system had 169,653 hourly patrons, compared to 179,037 this year, an increase of about 5.5%. Systemwide there were about the same number of spaces available, 6,918 in January 2011 compared to 6,895 in January 2012. [.pdf of January 2012 monthly parking report]

Ann Arbor public parking system hourly patrons. (Image links to larger file.)

Ann Arbor public parking system revenues. (Image links to larger file.)

Parking: Underground Garage Construction Update

Splitt said his report on the new underground parking garage would be much like it had been for the last two months, because it’s winter. Work is being done inside the deck on mechanical systems and lighting. Walls are being poured, he said, inside the structure. He expected that wall pours would be done at the end of March. They’re shooting to get South Fifth Avenue re-opened by the end of May, but hopefully it will be open before that, he said.

Newcombe Clark asked if there might be staging potential for the art fair (July 18-21) on top of the deck? Splitt said that if work stays on schedule, the surface work might be complete by the time of the art fairs. He also indicated that the garage might be opened in phases, with the first couple of levels opened before the lower levels.

During his report from the Downtown Citizens Advisory Council, Ray Detter said he’d visited the lower floors of the new underground parking garage under construction, and it could only be described as “awesome.”

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: FestiFools – Parking Meter Puppet?

At the end of the meeting, during the time for other DDA business, mayor John Hieftje told the board that FestiFools is facing a dilemma. [Festifools is an annual street festival in downtown Ann Arbor – this year held on Sunday, April 1 – involving very large puppets. The event has expanded to include FoolMoon, a procession of luminaries, which takes place this year on Friday, March 30. Workshops to create luminaries are being held every Sunday in March from 10 a.m. to 5 p.m. at the Workantile (118 S. Main Street).]

Hieftje described the event as an innovative, quirky and fun project and they were hoping that the DDA could waive a $1,000 parking meter bag fee associated with closing streets.

Susan Pollay, executive director of the DDA, was asked for clarification of the meter bag fees. [The fee per meter was raised from $15 to $20 effective Feb. 1, 2012.] She explained that the parking rate increases authorized in January 2012 also made other changes to meter bag fees. Now, what’s required is a reimbursement of actual costs incurred (from Republic Parking) to place the meter bags on Sundays and holidays. After the meeting, Pollay told The Chronicle that Republic Parking’s labor contract with its workers requires a minimum call-out time of four hours.

From the set of parking policy changes authorized by the DDA board in January 2012, for February implementation:

Meter bag requests for Sundays and Holidays will incur a fee for meter bag installation fee of $160 for up to 100 bags and $320 for more than 100 bags.

What’s different this year compared to last year, Pollay told Hieftje, is the reimbursement of actual costs on Sundays and holidays – FestiFools falls on a Sunday. Hieftje asked that one of the DDA board committees talk about waiving the fee.

Keith Orr commented that often when the DDA does nice things, it doesn’t get recognition for that. He suggested that the Sunday actual cost fee be waived in exchange for FestiFools creating a parking meter puppet, or a meter-bag puppet.

DDA board member Keith Orr suggested that the DDA's fee waiver for FestiFools be tied to the creation of a parking meter puppet.

Sandi Smith weighed in on the importance of not doing something retroactively – it needs to be addressed now. She allowed that FestiFools is a great event. But she noted that there are more and more events downtown, and she noted that the DDA would get similar requests from other organizations. She pointed out that there’s a community events fund, which the city of Ann Arbor administers. It sounds simple and like a no-brainer to waive the fee for FestiFools, she said, but she had concerns about making a judgment for one event and not another.

Newcombe Clark followed up on Smith’s point by noting that the board heard a lot of “You’re not doing enough!” but this would create another opportunity for people to say, “Why not me?” He weighed in against waiving the fee in the absence of a policy.

Leah Gunn made a formal motion, which she would subsequently withdraw, that the DDA waive the $320 Sunday fee in exchange for a puppet in the parade. Hieftje said he supported that motion, but would like to go further than just the $320 and to waive all the meter bag fees, saying that the event is still really just getting started. He said the issue had come up quickly and caught FestiFools by surprise.

Clark suggested that it would be a better approach for now to have Pollay handle it within her discretion as executive director. John Mouat also indicated he was concerned about any approach that sets precedent for piecemeal solutions. Gunn was amenable to having Pollay handle the issue and withdrew her motion. Russ Collins weighed in supporting that approach, saying he would have suggested simply amending Gunn’s motion to provide direction to Pollay to handle the issue administratively.

Comm/Comm: LED Lights

Ted Williams and Jaspreet Sawhney of Falcon Innovations Inc. both attended the March 7 meeting, although it was Williams who gave a presentation to the board during public commentary.

Ted Williams of Falcon Innovations Inc. showed the DDA board an example of the kind of LED light bars his company manufactures.

The pair had previously paid the board a visit back on July 6, 2011 to introduce board members to their company’s LED lighting technology, which is sold under the brand name BLUECOLT. Williams showed them an LED light bar, which he described as revolutionizing lighting for many different applications. He showed the board slides of interior lighting applications, and illuminated exterior signs including some for Domino’s Pizza and the University of Michigan block M (at Glick Field House).

The main idea that Williams wanted to get across to the board regarded potential applications to lighting in parking structures. In most typical parking structure lighting applications, Williams explained, the light is up in the rafters and bounces around, which wastes energy – because the light is trapped there, and it’s not near the surface that needs to be lit.

Another issue specific to parking structures, Williams explained, is that typically large chunks of light are spaced out every 30 feet or so – that can cause alternating dark spots and glare for drivers. The concept that Williams showed the board would use light bars mounted under the beams of the parking structure, which would use “little bits of light spread out evenly.”

From a slide presented by Falcon Industries Inc. to the DDA board, illustrating an under-beam placement of LED light bars in a parking structure.

Williams told the board he’d be attending the third in the series of sustainability forums to be held at the downtown location of the Ann Arbor District Library, starting at 7 p.m. on March 8. The forum will cover Ann Arbor’s climate action plan, climate impacts, renewable and alternative energy, energy efficiency and conservation.

After Williams’ presentation, board member Newcombe Clark asked Williams if he’d been in touch with DDA executive director Susan Pollay. Williams indicated that he’d been in touch, partly as a result of the previous visit to the board.

Mayor John Hieftje wanted to know if the LED lights manufactured by Falcon could be dimmed – yes, he was told.

Comm/Comm: 1320 S. University

During his report from the Downtown Citizens Advisory Council, Ray Detter said he was pleased that the planning department and the planning commission had recommended denial [on Feb. 7, 2012] of the owner’s request to rezone the property at 1320 S. University from D2 to D1. However, he continued, he was disappointed that the owners of the property have nevertheless submitted a proposal to the city council that the property be rezoned. Detter described that upcoming vote [probably in April] as a test for the city council.

Comm/Comm: DishFish

Joel Verdun addressed the board during public commentary at the conclusion of the meeting, pitching DishFish, which he described as a fundraising coupon and community currency. The free coupons cost businesses no money, he said, and the coupons go back into circulation. He said he’d like to work with the DDA’s economic development and partnership committee to put the DDA logo on the coupons.

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

Absent: Roger Hewitt.

Next board meeting: Noon on Wednesday, April 4, 2012, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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DDA Quiz: Board member Sandi Smith is illustrating: (a) the "increment" in "tax increment financing," (b) the amount of a parking rate increase, (c) building heights and flood plains, or (d) relative thickness of concrete slabs in parking structures. (Photos by the writer.)

The amount of the award was 90% of the total amount the board could have awarded –$45,000 of $50,000. It’s the same amount the board has awarded in each of the last three years. It’s based on a variety of criteria, including customer satisfaction surveys, independent inspections of the parking facilities, and financial performance.

February’s meeting also included a review of the DDA’s finances at the mid-point of the fiscal year – through Dec. 31, 2011. The DDA’s fiscal year runs from July 1 to June 30. Operations committee chair Roger Hewitt sketched out a picture that portrayed things unfolding pretty much as expected. Although parking revenues are currently about $125,000 under the year-to-date budgeted amount, parking revenues are projected to finish the year at around $672,536 over the budgeted amount. The gross parking revenue now anticipated for FY 2012 is around $16.8 million. But capital costs associated with the new Fifth Avenue parking garage construction are anticipated to put the parking fund expenses over budget.

Part of that parking system revenue will come from rate increases and changes in billing methods, which were approved by the board at its Jan. 4, 2012 meeting. Some of the changes will not be implemented until September 2012 – like hourly rates at parking structures and lots, which will climb from $1.10 per hour to $1.20 per hour.

But other changes were implemented starting Feb. 1, including a change in the billing method at parking structures and hourly lots – from half-hourly to hourly. The board heard criticism of the change during public commentary, from a resident who makes frequent but brief trips downtown as a patron of the downtown location of the Ann Arbor District Library. The billing change amounts to a “surcharge” on his library use of a couple hundred dollars a year, he said.

The board also heard a pitch from the developer of the 618 S. Main project, Dan Ketelaar, who is interested in financing certain elements of the project through the state’s Community Revitalization Program. That’s the successor to the state’s brownfield and historic preservation tax credit program.

The 618 S. Main project, which received a positive planning commission recommendation on Jan. 19, would be a 7-story, 153,133-square-foot apartment building with 190 units for 231 bedrooms. The idea would be for the DDA to forgo a portion of the taxes that it would ordinarily capture on the newly constructed 618 S. Main project. The DDA captures taxes from the increment in value due to new construction within its tax increment authority (TIF) district.

The board also heard a pitch from Jody Lanning, with Lanning Outdoor Advertising, for a way to finance murals on the city’s parking structures and other public buildings. The board also entertained its usual set of updates from boards and commissions.

Parking Finances

The monthly report on parking revenues and activity is a standard element of Ann Arbor DDA board meetings. The report is usually delivered by board member Roger Hewitt, and the Feb. 1, 2012 meeting was no different. But earlier in the meeting, Hewitt had already touched on the state of the DDA’s parking fund as part of the fiscal year mid-point update.

And the topic of parking revenues, as reflected in a critique of recent rate and billing method increases, came up during public commentary, too.

Parking: Overall State of the Fund

The parking fund is one of four funds in the DDA’s system of accounting. The DDA’s fiscal year runs from July 1 to June 30. The six-month update for the parking fund, reported by Hewitt, shows year-to-date revenue as slightly below the amount budgeted. Specifically, through December 2011 the system had taken in $8,392,644, but the year-to-date budgeted amount is $8,518,094. [.pdf of year-to-date FY 2012 financial picture for all funds]

Still, Hewitt said, the DDA expects to finish the year with $16,835,288 in revenue against a budgeted amount of $16,162,752. That’s a surplus of $672,536 or 4.16% more than budgeted. So by year’s end, Hewitt concluded, the DDA anticipates almost $17 million in parking revenue. Parking operating expenses are, for the moment, lower than budgeted, Hewitt said – just $2,668,055 against $4,743,996 for the year-to-date budgeted amount.

But by year’s end, the capital expenses associated with construction on the new Fifth Avenue underground parking garage are expected to put operating expenses for the parking fund $1,450,514 (or 19.37%) over the year’s budgeted operating expenses of $7,487,994. Direct parking expenses – the contract with Republic Parking, including the 17% of gross that’s paid to the city – are currently slightly under budget, Hewitt said: $3,513,189 against a $3,844,733 year-to-date budgeted amount. But he anticipated that those expenses would be right on budget by the end of the year.

Overall, by year’s end the DDA anticipates spending $835,544 more out of its parking fund than it has taken in.

Parking: Monthly Report

Included in the board’s information packet were three reports: (1) the most recent monthly report, for December 2011; (2) the report for the most recent quarter, for October-December 2011; and (3) the report for the last six months, for July-December 2011. [.pdf of parking reports July-December 2011] All three reports, said Hewitt, tell the same story. Revenues are up 9-10% compared with the same periods a year ago – which is greater than the rate increase that has taken effect since then, Hewitt said.

Patrons are also using the system in greater numbers, he said. Compared with the same six-month period a year ago, the report shows 43,696 (or 4.06%) more hourly patrons. For a year, that projects to 90,000 additional trips downtown, he said. Hewitt called them “strong numbers in an economy that’s not booming.” He said the numbers show a very strong demand for parking.

Ann Arbor public parking system revenue. (Links to larger image)

Ann Arbor public parking system hourly patrons. (Links to larger image)

Parking: Hourly Billing – Approval

When Hewitt updated his colleagues on the parking numbers, he used a rough metric to evaluate the 9-10% increase in revenues over the period of July-December 2011, compared with the same period in 2010: If the percentage-wise revenue increase is greater than the increase expected solely from parking rate increases over the same period, it demonstrates that more total parking hours are being sold.

Sign at Fifth and William surface parking lot entrance off of William Street: "There will no longer be 1/2 hour increment rates." The same billing change applies to parking structures. Rates in structures are set to rise to $1.20 per hour in September 2012.

Until Feb. 1, 2012, that rule of thumb has not needed to factor in any changes to the time increment in the billing method. The billing method – which up until Feb. 1 was based on half-hour increments – has remained constant since 2003. But along with a a recent round of parking rate increases, approved by the DDA board at its Jan. 4, 2012 meeting, a billing method change was approved as well. Hourly parking – in structures and on surface lots – is now charged in hourly increments, not half hourly increments. Before considering the financial impact of that change, it’s worth reviewing the process used to decide rate increases.

A new contract, under which the DDA manages the city’s public parking system, was ratified in May 2011 with the city of Ann Arbor. The terms of the new contract give the DDA the authority to set rates. The previous contract allowed the city council to veto rate increases.

In order to implement parking rate increases, the DDA is required under terms of the contract to schedule a public hearing, with the details of planned rate increases spelled out in writing. The hearing is then to be held at the following month’s board meeting, with a vote coming no sooner than the board’s next monthly meeting. The DDA announced a public hearing before its Nov. 2, 2011 meeting and continued the hearing at its Dec. 7, 2011 meeting. The vote approving the rate increases was held at the board’s Jan. 4, 2012 meeting.

The rate increases described in the board’s Nov. 2 meeting information packet do not include the billing change from half-hour increments to hour increments. But the change in billing will have a substantial impact on the cost of parking and the parking system revenues.

Parking: Hourly Billing – Financial Impact

Some of the rate changes approved by the DDA board on Jan. 4, 2012 will not be implemented until September 2012 – like hourly rates at parking structures and lots, which will climb from $1.10 per hour to $1.20 per hour.

But other changes were implemented starting Feb. 1, including a change in the billing method at parking structures and hourly lots – from half-hourly to hourly.

To compare the hour-increment billing method to the half-hour billing method, assume that parking times are evenly distributed among those people who parked between N and (N + 0.5) hours and those who parked between (N + 0.5) and (N + 1) hours, where N is some whole number.

On the hour-increment billing method – for the current hourly rate of $1.10 – the first group would pay for N + 1 hours, or roughly $0.55 more than under the half-hour-increment method, under which they’d pay just for N + 0.5 hours. The second group would pay for N + 1 hours under either billing method. So by changing from half-hourly to hourly increments, half of the roughly 2 million annual hourly patrons would pay $0.55 more – generating roughly $550,000 more revenue annually.

In the monthly parking report for February 2012, which should be available by the time of the April board meeting (there’s a two month lag time), it’s reasonable to expect at least around $550,000/12 or $45,000 in additional revenue for that month, compared to February 2011.

The March 4, 2009 DDA board minutes reflect similar numbers based on the hourly rate at the time, $0.80: [emphasis added]:

Whereas, The DDA Operations Committee also determined that it has tools available to it to increase parking revenues if needed including the following (in recommended order):
-increase the daily cost of meter bags $5/day from $15/day to $20/day (anticipated to increase revenues by $181,000/year). The DDA could also limit the amount of meter bag fee waivers it provides nonprofits and government agencies, which is currently in excess of $150,000)
-Return to charging for parking by one-hour increments rather than 30-minute increments (anticipated to increase revenues by $400,000/year). The change to 30-minute increments was made in 2003.
…

Back in 2009, the DDA board was simply weighing various alternatives for generating revenue – at the request of the Ann Arbor city council to explain how the DDA could afford construction of the new underground parking garage. The board did not act at the time to change the billing method.

Beyond a clarificational question asked by board member Nader Nassif at the Jan. 4 meeting, the board did not deliberate on the billing method change, and it received little, if any, public scrutiny – because the change was not included in the written set of rate increases associated with the public hearing. However, the change in billing method did not go unnoticed.

Parking: Hourly Billing – Public Commentary

During the public commentary period at the start of the Feb. 1 meeting, Matthew Barritt told the board he is concerned with two things: (1) short-term parking for library patrons; and (2) the change from half-hourly billing to hourly billing for structures and lots. As a result of the construction on the new underground parking structure on Fifth Avenue, he said, two dedicated spaces on the lot next to the library – for 10-minute short-term use by library patrons – were eliminated. There used to be a 10-minute grace period, he said.

Ann Arbor District Library book return slot off of William Street.

Barritt described how he and his family visit the library about twice a week – dropping off and picking up books, after reserving them online. They previously were able to come and go under the 10-minute grace period. Now, he’s had to pay 60 cents per visit to the library to check out and pick up books.

Barritt asked for a restoration of the 10-minute grace period. It’s his understanding that there is a grace period, but it’s not publicized and does not seem to be operationally functional. Because there’s no longer dedicated spaces with a 10-minute grace period, he said, it works works out to a “surcharge” of over $100 on his library use.

And with the change from half-hourly billing to hourly billing, Barritt said, the effective parking rate is different from the advertised rate. It’s always rounded up, he pointed out, and that results in an underrepresented rate. As an example, he said, for 10 minutes – at an hourly rate of $1.30 (rounded up) – that works out to nearly $8 an hour.

Barritt stated that the practice is inappropriate and he ventured that the DDA couldn’t have pitched such a rate to the city council for approval. He recognized the need for revenue, but stated that the effective rates should be the same as the advertised rates.

Barritt concluded by saying he’d like to see a fully-functional 10-minute grace period in the current lot as well as in the new underground parking structure.

Parking: Hourly Billing – Board Discussion

Later in the meeting, as Roger Hewitt was updating his board colleagues on parking revenues, Joan Lowenstein asked about the issue that Barritt had raised. Hewitt responded by saying that with the transition to hourly billing (instead of half-hour increments), a 10-minute grace period would remain in place. Board member Russ Collins wondered if that would apply even to lots with automatic walk-up pay stations (without attendants).

William Street just north of Fifth Avenue looking west. Five-minute parking is available next to the downtown location of the Ann Arbor District Library.

DDA deputy director Joe Morehouse clarified that the grace period is implemented for all hourly facilities, but he acknowledged that the dedicated spots for library patrons are not provided in the Fifth and William lot [also known as the Old Y lot]. That’s the lot that essentially became the closest surface-lot alternative for library patrons after construction began on the site for the underground parking structure. Morehouse clarified that there is, in fact, a 10-minute grace period – in fact, it can be stretched to 15 minutes to allow for time to exit the lot.

Leah Gunn, who chaired the board meeting in Bob Guenzel’s absence, noted that on East William Street (just north of Fifth Avenue) there are 5-minute on-street spaces for quick drop-offs at the library – that’s where the book and the audio visual return slots are located.

In the new underground parking structure, Hewitt added, a walk-up payment system will be a primary option. Those will be in place on the surface and on the first two levels underground. Patrons will pull a ticket on the way in and put the ticket into the automatic pay station on the way out – which will allow payment with a credit card or cash. A staffed booth will also be available if that’s what a patron prefers. There will be no pay stations on underground levels three and four initially, because they’re expected to be filled with monthly permit holders.

Parking Management Incentive

Although the DDA manages the city’s public parking system under contract with the city of Ann Arbor, it uses a contractor, Republic Parking, to handle day-to-day operational issues. At its Feb. 1 meeting, the board considered a management incentive under the terms of its contract with Republic Parking. The board has discretion to award $50,000 of the $200,000 total. The other $150,000 of the $200,000 is not discretionary, and is paid to Republic in monthly installments.

The management incentive is paid based on customer satisfaction surveys and independent inspections of the parking facilities, as well as other metrics. The free responses section of the survey included a range of sentiments, from enthusiastic praise of specific Republic Parking employees (“Staff is always very friendly” and “Teri and Cathy are the greatest!!”), complaints about employee job performance (“I don’t pay $12-$13 a day to be inconvenienced because your employees can’t get their job done timely!”), praise for the facilities (“Very clean and nice art work on ground floor at curved wall on the southeast comer”) and criticism of the facilities (“Please clean more. And take care of the awful smell on floor 4″). Sprinkled through the responses are complaints about parking rates. [.pdf of parking customer responses]

The rating scale responses of the survey broke down as follows: 5-Excellent (36.5%), 4 (26.3%), 3 (14.0%), 2 (9.5%), 1-Poor (6.7%), Non-Responsive (6.9%). Last year the same survey yielded the following results: 5-Excellent (22.5%), 4 (32.3%), 3 (17.9%), 2 (4.6%), 1-Poor (2.2%), Non-Responsive (20.1%). So the number of survey respondents giving a rating of 5 or 4 increased from 54.8% to 62.8%. The rating of 1 or 2 also increased, from 6.8% to 16.2%. Around 600 people responded to the survey.

The DDA’s independent parking inspector made 48 written reports to evaluate the cleanliness of the facilities systemwide last year. Average for the year was 90.48%, which is a three-point drop from last year’s score of 93.7%.

The Dec. 31, 2010 accounts receivable balance for parking permit accounts stood at $106,965. That’s 25% of the average monthly billing and five times the target of 5%. But it reflects a decrease from 28.5% last year. The dead ticket average was 2.56% for the year – an increase from last year’s 1.56%, and above the target of 1.75%. The operating surplus on June 30, 2011 was $23,133 more than budgeted.

At the board meeting, Roger Hewitt explained the structure of the Republic Parking contract with the DDA and described the various criteria. DDA staff had weighed all the criteria, made an overall assessment and was recommending $45,000 compared with the maximum $50,000.

In each of the previous three years (2009, 2010, and 2011), the DDA board voted to award the same $45,000 incentive. In those years, mayor John Hieftje had voted against the incentive. This year the vote was unanimous.

Outcome: The board voted unanimously without substantial discussion to award $45,000 out of the $50,000 management incentive.

Communications, Committee Reports

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

Comm/Comm: Underground Garage Construction Update

John Splitt gave an update on the underground parking garage construction. He noted that despite the mild winter, temperatures have not been high enough to allow for the application of waterproof coatings. Work on mechanical systems like elevators, however, continues. Roger Hewitt noted that for an underground parking structure it actually has a bright and open feel to it. The ceilings are two feet higher than in the Maynard structure. The architect, Carl Luckenbach, did a great job with the stairwells, he said – the sun shines down four stories underground.

Hewitt also gave an update on the precise number of underground spaces the structure is expected to provide: 706. [The initial design estimates for a larger structure that would have extended to William Street put the number at around 770. When that dogleg was truncated, it reduced the estimate to 670. More recently, the more conservative figure of 640-650 has been given.]

Comm/Comm: getDowntown Survey

Nancy Shore, director of the getDowntown program, gave the DDA board an update on a survey that had been completed, asking downtown employers and employees about their commuting habits. The survey showed a slight reduction in the number of people who commute by driving alone. [.ppt file of getDowntown commuter survey]

Comm/Comm: Vacancies, SEMCOG, William Street

Joan Lowenstein reported on the most recent meeting from the partnerships committee. Committee members had received an update from representatives of Swisher Commercial about downtown vacancy rates. Ann Arbor is somewhat immunized from the economic downtown, she said. Vacancies decreased by 2.5% in 2011 and there’d been a 40% increase in lease dollar volume – landlords are willing to show some optimism by entering into longer-term leases. Lowenstein said some companies looking to expand can’t find the larger floorplates they need.

Lowenstein also reported that the committee had received an update on forecasts from SEMCOG (the Southeast Michigan Council of Governments) through 2040. SEMCOG estimates the region will make a slow recovery over the next 30 years. [For a more detailed breakdown, see Chronicle coverage of the presentation made to the planning commission: "City Planners Preview SEMCOG Forecast"]

Village Green City Apartments Groundbreaking on Jan. 26, 2012.

Lowenstein reported that the “Discovering Midtown” project – a process for exploring alternate uses of downtown city-owned surface parking lots, has had its name changed. The effort will now be known as “Connecting William Street,” to avoid confusion with a character district in the city’s zoning ordinance that is called Midtown.

The process is being led by the DDA based on direction given by the Ann Arbor city council at the council’s April 4, 2011 meeting. Lowenstein reported that a leadership and outreach committee is working on social media strategies. A hundred different stakeholders and groups have been identified. In mid- to late February a community-wide survey will be released. Parts of that survey are currently being finalized.

Lowenstein also noted that ground had been ceremonially broken on Jan. 26 for Village Green’s City Apartments project at First and Washington. That’s a joint venture between Village Green and the DDA, which will include two floors worth of public parking on the first two stories of the building, some of which will be reserved for residents of the building.

At the Feb. 1 meeting, the board briefly discussed the possibility of canceling the February partnerships committee meeting. Noting a possibly very light agenda, board members were inclined to cancel the committee meeting, which would ordinarily have taken place the week after the board meeting – in this case, on Feb. 8. The board agreed to do that. Executive director Susan Pollay’s suggestion that the 618 S. Main project would be a suitable topic for the partnerships committee agenda that month was not met with any outward signs of enthusiasm from board members.

Comm/Comm: 618 S. Main

During public commentary, Dan Ketelaar spoke about his 618 S. Main project. It would be a 7-story, 153,133-square-foot apartment building with 190 units for 231 bedrooms, located on the former site of Fox Tent & Awning between Main and Ashley, north of Mosley. Ketelaar described the location as in the southernmost part of the DDA district. He also described it as a “gateway project.” He noted that it is located in an area zoned D2 (downtown interface) and is being developed for young professionals. A week and a half ago, he told the board, the Ann Arbor city planning commission had given the project its recommendation, at its Jan. 19, 2012 meeting.

618 South Main facade, facing west from Main Street. (Links to larger image)

The building would include two layers of parking – more than what’s required, Ketelaar said. The courtyard would include a rain garden, and the project would meet the silver standard for LEED certification. Ketelaar told the board he’s suggesting redoing the streetscape along Main between his project and William Street. He reported that Ward 5 councilmember Mike Anglin had requested that traffic calming measures be implemented along that stretch, including adding on-street parking. Ketelaar said he’s interested in helping to “create the future of Ann Arbor” and not just deal with the past.

Early in his turn at the podium, Ketelaar described the parcel as a brownfield site, a topic that the attorney for the project, John Byl, elaborated on. Byl is with the firm Warner Norcross & Judd. He described contamination on the site due to petroleum from an underground tank. The project would clean up that contamination under the state’s Community Revitalization Program, which is the successor to the brownfield program. The required local contribution to that program, he suggested, would come from the DDA. The project would mean a $25 million investment resulting in a taxable value of $9.5 million. He calculated that it would generate $250,000 in additional tax increment finance capture per year.

By way of brief background, the mechanism of a tax increment finance (TIF) district allows an entity like the Ann Arbor DDA to “capture” a portion of the property taxes in a specific geographic area that would otherwise be collected by taxing authorities in the district, like the city or library. The tax capture is only on the increment in valuation – the difference between the value of property when the district was established, and the value resulting from improvements made to the property. In the DDA district, only the taxes on the initial increment are captured – any additional inflationary value beyond that goes to the taxing authorities in the district. Those authorities are the Ann Arbor District Library, Washtenaw Community College, Washtenaw County, and the city of Ann Arbor.

A spiral-bound booklet on 618 S. Main, distributed to board members at the Feb. 1 meeting, outlined the costs for various LEED features – like rain gardens and solar panels, plus streetscape improvements – totaling $2.3 million. The developer would pay all those costs upfront, but six months after a certificate of occupancy is issued, Ketelaar would be reimbursed for up to $1 million, Byl suggested. That would be around mid-2014 or so. The balance of roughly another $1 million would be reimbursed over time from the tax increment that the DDA captured. If the DDA reimbursed at a rate of 75% of the $250,000 a year it would receive in additional tax capture, it would take about six years to reimburse those expenses, concluded Byl.

Comm/Comm: Murals

During public commentary at the start of the meeting, Jody Lanning – owner of Lanning Outdoor Advertising – pitched the board an idea for an advertising partnership involving the placement of murals on public parking structures. She told the board she’s been in the outdoor advertising industry for 18 years.

Concept for a mural on the Fourth and William parking structure in downtown Ann Arbor – presented to the DDA board by Jody Lanning.

She’s worked in the Atlanta and Kentucky markets, she said, and she moved to Michigan three years ago. She said she’s noticed how public art is used in other cities, and she enumerated several benefits of public art. She presented slides depicting some parking garages and the city hall building with concepts for murals.

The business model would consist of renting wall space on parking garages – it would be funded through sponsorships. She estimated that a wall could generate $5,000 in income. Her proposal would be that she’d received a 50% share – out of which 10% would be put aside for scholarships. She suggested forming a board of perhaps four people who would make decisions on the art.

Comm/Comm: Rezoning from D2 to D1

A highlight from Ray Detter‘s report from the previous evening’s meeting of the Downtown Area Citizens Advisory Council included the highlight that nearby residents of 1320 S. University had attended the meeting. They’re opposed to a proposal to rezone that parcel from D2 to D1, which will be considered by the planning commission on Feb. 7, 2012. Detter said the CAC will oppose the rezoning. [The city planning staff recommended denial of the request.]

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

Absent: Newcombe Clark, Bob Guenzel, Keith Orr.

Next board meeting: Noon on Wednesday, March 7, 2012, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

The mid-January and early February rate changes are estimated to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First & William lot permits by $10/month ($5,000). The change of the effective start date for the early-year rate changes (to Jan. 21 instead of Feb. 1) will apply only to the meter bag rates. The other set of early-year changes will be implemented starting Feb. 1.

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly parking structure rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; and monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%).

The rate increases were the subject of a public hearing that started at the DDA board’s Nov. 2, 2011 meeting and continued through its Dec. 7, 2011 meeting.

[.jpg of Ann Arbor public parking system revenues since Aug 2009][.jpg of Ann Arbor public parking system hourly patrons since August 2009]

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

Front to back: Ann Arbor Downtown Development Authority board members Nader Nassif, Leah Gunn, John Hieftje. (Photos by the writer.)

The board will not vote on the rate increases until its Jan. 4, 2012 meeting. Some of the rate changes are scheduled for implementation in February 2012, but the increases affecting most downtown Ann Arbor parkers would not be implemented until September 2012. The September changes include an increase from $1.40 to $1.50 per hour for on-street metered spaces and an increase from $1.10 to $1.20 per hour for spaces in parking structures.

Some insight into the DDA’s interest in raising parking rates can be found in the DDA’s finances, as reflected in its annual audit. Acceptance of its annual audit report was the one action item on the agenda for Wednesday’s meeting. The board voted to accept its audit report done by the firm Abraham & Gaffney, P.C. for the fiscal year ending June 30, 2011.

Auditor Alan Panter had presented the report to a subset of DDA board members at a Nov. 30 meeting of the DDA’s operations committee.

The report notes an instance of expenditures exceeding the amount of funds appropriated that is inconsistent with Michigan’s Uniform Budgeting and Accounting Act (UBAA) of 1968. At Wednesday’s meeting, DDA board members characterized it as a “technical violation.” At the operations committee meeting, the $337,478 overage was attributed by DDA staff to the submission of a bill forwarded to the DDA in June by its construction management consultant (Park Avenue Consultants Inc.) – connected to the underground parking garage and streetscape improvement projects currently under construction.

For the fiscal year 2011, the DDA showed $18,806,765 in revenues against $20,796,665 in expenses, drawing $1,989,900 from the fund balance reserve. The planned draw on fund balance is related to the underground parking garage construction payments as well as a new contract, signed this year, under which the DDA operates the city’s public parking system. That contract assigns 17% of gross parking revenues to the city of Ann Arbor. At the Nov. 30 committee meeting, DDA board member Newcombe Clark was keen to confirm the inclusion of the new contract as a note in the audit.

In his presentation to the operations committee on Nov. 30, Panter highlighted the fund balance reserve for the parking fund as a concern, saying that the fund was near deficit – it shows a fund balance reserve of less than 1% of operating expenses. A recommended fund balance level, said Panter, is 15-20%.

Another still outstanding issue for the DDA’s finances is the correct interpretation of the city’s ordinance (Chapter 7) specifying how the DDA tax increment finance (TIF) capture works. At Wednesday’s meeting, the board held its third closed session on the topic since July, to discuss the written opinion of its legal counsel on the issue. Taxing authorities that have their taxes captured under the Ann Arbor DDA TIF district have questioned the DDA’s legal position – the DDA contends that Chapter 7 does not place limits on its TIF capture. Depending on how the issue is resolved, it could mean as much as $600,000 less per year in TIF capture, compared with the budget planning the DDA is currently doing.

Also at the Dec. 7 meeting, during the opportunity for public commentary, the DDA board heard from Jim Kosteva –University of Michigan director of community relations – about a request to eliminate two on-street parking spaces on Monroe Street. With the imminent opening of the newly constructed South Hall, on the south side of Monroe, it’s anticipated that students will attempt to cross mid-block. The elimination of the parking spaces would be intended to make students who are crossing mid-block more visible to motorists. Based on the verbal exchange with Kosteva at the podium, it appears possible, but not guaranteed, that some kind of arrangement could be reached before the start of the next semester.

DDA FY 2011 Audit

The DDA board was asked to consider a resolution to accept its annual audit for the fiscal year ending June 30, 2011.

The report from the auditing firm Abraham & Gaffney, P.C. notes an instance of expenditures exceeding the amount of funds appropriated that is inconsistent with Michigan’s Uniform Budgeting and Accounting Act (UBAA) of 1968. Auditor Alan Panter had presented the report to a subset of DDA board members at a Nov. 30 meeting of the DDA’s operations committee. At that meeting, 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.

Ordinarily, the DDA’s budget is adjusted to match actual expenditures just before the close of the fiscal year, which the DDA board did this year at its June 1, 2011 meeting. Estimates are given for invoices anticipated to be received before the end of the year. The bill submission prompting the auditor’s notation came after the June 1 adjustment.

At the Ann Arbor city council’s Dec. 5 meeting, Stephen Kunselman (Ward 3) complained about the violation noted in the DDA audit report and called for the report to be forwarded to the state, as described in the UBAA.

For the fiscal year 2011, the DDA showed $18,806,765 in revenues against $20,796,665 in expenses, drawing $1,989,900 from its fund balance reserve. The planned draw on fund balance is related to the underground parking garage construction payments as well as a new contract, signed this year, under which the DDA operates the city’s public parking system. That contract assigns 17% of gross parking revenues to the city of Ann Arbor. At the Nov. 30 committee meeting, DDA board member Newcombe Clark wanted to make sure that the new contract was included as a note in the audit.

In his verbal presentation to the board committee on Nov. 30, Panter had highlighted fund balances in two ways. First, he noted that the DDA’s housing fund no longer meets the definition of a special revenue fund under the Government Accounting Standards Board (GASB) Statement No. 54. The money in the housing fund, which is allocated from the DDA TIF (tax increment finance) fund, is thus included as “assigned” funds within the DDA’s general fund (aka TIF fund).

Second, Panter noted that the DDA’s parking fund balance as a percentage of parking expenditures for the year ($104,821/$15,998,564 = 0.6%) is “on the edge of deficit.” As DDA board members explained to Panter, the DDA operates its funds essentially as one fund. In that context, Panter described the fund balance as roughly 25%. He gave 15-20% as a recommended level. He cautioned, however, that allowing any individual fund to go into deficit is a violation of the UBAA.

DDA FY 2011 Audit: Board Discussion, Deliberations

DDA board member Roger Hewitt reviewed the audit report for his board colleagues.

He began by reviewing fund balances. The TIF and the housing fund have a fund balance reserve of a bit over $6 million, the parking maintenance fund a bit less than $2 million, and the parking fund a little over $100,000 for a total of around $8.2 million. The low balance in the parking fund is part the DDA’s 10-year financial plan for construction of the underground parking garage, Hewitt, said. He characterized it as the “ebb and flow” of money when you have a large construction project, and he stated that the low fund balance did not reflect an intrinsic problem.

Hewitt put the $2.7 million overall drop in the fund balance from last year in the context of building it up to close to $20 million at one point. The money is now being used up, he said – for the underground parking garage and also for the Fifth and Division streetscape improvement project. He said he wanted to warn everyone that the fund balances will be even lower next year. He noted that the two current construction projects, plus Village Green’s City Apartments project at the First and Washington lot, would place an additional burden on the DDA’s fund balances.

[At the Nov. 30 operations committee meeting, board members discussed the fact that the finalization of the First and Washington land sale from the city of Ann Arbor to Village Green was expected to be done this week. The city council gave final sign off at its Nov. 10, 2011 meeting. With some question about whether construction would actually start in December, Newcombe Clark joked that the lot could be turned into a temporary ice rink. A more serious suggestion from Clark, to turn the lot into free holiday parking, prompted talk of insurance and liability issues once the property is legally transferred to Village Green.]

Hewitt stressed that the auditor had said it was a clean audit. None of the figures had been found to be in error, he said. Given the amount of activity associated with the construction projects, he said, it reflected good work by DDA executive director Susan Pollay, deputy director Joe Morehouse and the staff.

Hewitt allowed there was one technical issue the auditors had brought up. He reviewed that by law the DDA is required to amend the budget to reflect actual expenditures before the end of the year. After the board had done that budget amendment, but still before the end of the fiscal year on June 30, the DDA had received a number of large invoices, which had been estimated. The estimate had fallen short of the actual amount. He characterized the excess of expenditures beyond allocated amounts as a “technical violation.” He stressed that the auditor’s report did not recommend any corrective action. Responding implicitly to the call from Kunselman to file a report with the state, Hewitt said the audit report is always filed with the state of Michigan once it’s approved.

Newcombe Clark asked Hewitt to enumerate some of the ways that the DDA might realize additional revenue – to give some context for people who might think that the fund balances look low. Hewitt said there were a number of things the DDA could do. One was to increase parking rates in different areas. Hewitt noted that after the current increase is implemented, future increases are anticipated to match inflation. Hewitt stressed that the DDA’s projections for TIF revenues are conservative. TIF revenue is only included in projections once the improved property is on the tax rolls. Two projects are under construction now, he said, and others are planned.

[Currently under construction in the DDA district are Zaragon West and 601 S. Forest. Two other approved projects with construction starts possible in a few months include Village Green's City Apartments and The Varsity Ann Arbor on East Washington. Other projects also in the pipeline are a residential project at 618 S. Main and a hotel at Washington and Division.]

Savings on the expense side, said Hewitt, could come from some deferred maintenance on the parking structures. The DDA had implemented a long-term aggressive maintenance program, he said, and the DDA is far enough ahead in the program that it could be reduced for a few years, with no impact on the integrity of the structures.

Outcome: The board voted unanimously to accept the audit report for FY 2011.

Parking Rate Increases

The overall condition of the DDA’s finances – in particular the nearly de minimus fund balance in the parking fund – provide the context in which the DDA board is proposing a set of rate increases. The contract with the city, under which the DDA operates Ann Arbor’s public parking system, gives the DDA the sole authority to set parking rates. However, it must follow a process explicitly stipulated in the contract, which includes: (1) announcement of the intended change at a DDA board meeting [Nov. 2, 2011] and announcement of a public hearing on the topic at the next DDA board meeting; (2) a public hearing on the rate increases [Nov. 2, 2011 continued on Dec. 7, 2011] and (3) a vote on the increases no sooner than the next DDA board meeting [likely on Jan. 4, 2012].

On Wednesday, continued from the board’s Nov. 2 meeting, was the public hearing on proposed parking rate increases. A vote on the rate changes won’t come until the board’s Jan. 4, 2012 meeting.

Parking Rate Increases: Details

The details of proposed parking rate increases were announced in late October, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

The February rate changes will have a relatively minor impact. Joe Morehouse, deputy director of the DDA, wrote to The Chronicle that he expects the February rate changes to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First & William lot permits by $10/month ($5,000).

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; and monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%). Based on the roughly $15 million in revenue generated by the public parking system last year, the parking rate increases could be expected to increase annual gross revenues somewhere between $0.54 million and $1.25 million, assuming no change in demand or capacity. However, on completion of the new underground garage on South Fifth Avenue, around 650 new spaces will be added to the system, which currently has around 7,000 spaces.

At a joint work session of the city council and the DDA board on Nov. 14 (between the two parts of the DDA’ spublic hearing on parking rate increases), representatives of the DDA did not present a financial case for the need to raise parking rates. And city councilmembers did not question the financial need for the rate increase.

Terms of a new parking contract, under which the DDA manages the city’s parking system, will provide the city of Ann Arbor with 17% of the increased gross revenue from a rate increase – or somewhere between $97,000 and $226,000 more than it currently receives under the contract. For the first quarter of FY 2012 (which started July 1, 2011), the 17%-of-gross calculation for the city’s share worked out to $662,471, which would project to $2.65 million annually without any change in rates, demand or capacity.

Parking Rate Increase: Public Hearing

Tom Heywood, executive director of the State Street Area Association, told the board he was there to express his full support of the DDA and its management of the public parking system. He remembered when many of the parking structures were at the point of collapse in the 1990s. Now, he said, it’s one of the most up-to-date, well-maintained and well-managed systems in the county. Through its new contract with the city of Ann Arbor, the DDA has been given the task of continuing that management through the next 10 years. The new contract, Heywood said, also gives the DDA the power to set rates. Heywood said the State Street Area Association may not always agree with specific rate decisions, but stands behind the DDA’s right to make them. He said it’s not always adequately recognized that the DDA is doing a first-class job.

Rich Bellas, owner of Van Boven Shoes, also expressed support for the DDA. He said it’s easy to point fingers when things don’t go right, but when you don’t know what the alternative would have been, it’s difficult to know if the city would be in even worse shape.

When the Maynard Street structure had to be closed and rebuilt, it was devastating to the neighborhood, he said, and never really recovered in some respects. Bellas said he never wants to go back to the situation that led to the need to rebuild the Maynard Street structure.

Outcome: The board did not vote on the increases – that will likely come at the board’s Jan. 4, 2012 meeting. The public hearing was closed.

Closed Session: TIF Capture

Another still-outstanding issue for the DDA’s finances is the correct interpretation of the city’s ordinance (Chapter 7) specifying how the DDA tax increment finance (TIF) capture works. The issue emerged in May of this year, just as the city and the DDA were poised to sign a new contract under which the DDA would operate the city’s public parking system.

In broad strokes, when first identified as an issue, there was apparent agreement by all parties, including the city and the DDA, that the ordinance limited the DDA’s TIF capture based on the TIF plan. That interpretation resulted in a repayment earlier this year of roughly $473,000 from the DDA to the Ann Arbor District Library, Washtenaw Community College, and Washtenaw County for excess taxes that the DDA had collected. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess. Questions were raised, however, about the method use to calculate the excess. [See, for example, this Chronicle column: "Tax Capture Is a Varsity Sport"]

But after a closed session on July 27, 2011 to consider written advice of its legal counsel, the DDA board took the position that the redistribution of those funds had not been necessary – leaving aside any question of the method of calculation.

At it’s Dec. 7 meeting, the board held its third closed session on the topic (counting those on July 27 and Nov. 2). Depending on how the issue is resolved, it could mean as much as $600,000 less per year in TIF capture, compared with the budget planning the DDA is currently doing.

Monroe Street Parking Spaces

The University of Michigan recently completed construction of a new building, South Hall, on the south side of Monroe Street. It sits on the opposite side of the street from Hutchins Hall. Both buildings are part of the UM law school.

The one-block section of Monroe Street between State and Oakland, where the buildings are located, has long been of interest to the University of Michigan as potentially being blocked off to pedestrian traffic, to provide a more coherent campus. One of the policy issues involved is the monetary value that the city of Ann Arbor and the DDA attach to on-street parking spaces. [For more detailed Chronicle coverage, see: "Column: Ann Arbor's Monroe Street Doctrine"]

At the DDA board’s Dec. 7 meeting, Jim Kosteva, director of community relations for the University of Michigan, addressed the board with a request to eliminate two of the 18 spaces that are now metered on the block of Monroe Street between State and Oakland.

He led off his remarks by saying he would have preferred to have had the opportunity to rehearse the material in other conversations before appearing before the board, but due to the timing issue, he wanted to take the opportunity to address the board during public commentary. He noted that in the Ann Arbor community recently, a great amount of attention had been given to crosswalks, in the interest of promoting pedestrian safety. [See Chronicle coverage: "Council Takes Step to Alter Pedestrian Law"] So he was addressing the board, seeking a similar improvement for access and visibility at a location near the law school campus, at a location where it’s expected to be practically a crosswalk.

Kosteva said it’s expected that between Hutchins Hall and the newly-constructed South Hall, hundreds of law school students will be going back and forth across the street. The new building was designed so that the door is aligned with the door of Hutchins Hall. There are two parking spaces in front of South Hall, Kosteva said, which he was requesting to be removed. The objective, he said, is to promote pedestrian safety.

Students will try to cross the street mid-block, he said, and without removal of the parking spaces, that means they’ll be trying to cross from between parked cars. During the course of construction, Kosteva pointed out, the block had seen the addition of two on-street parking spaces – from 16 to 18 spaces. That had been due to the elimination of some driveway entrances and loading zone areas. So compared to the pre-construction conditions, there would be no net revenue change to the public parking system if two spaces were now eliminated. Kosteva also pointed to three additional spaces along Oakland Street that had been gained as a result of the construction of South Hall.

DDA executive director Susan Pollay and University of Michigan director of community relations Jim Kosteva after the Dec. 7 DDA board meeting had concluded and before another meeting in the same room started. In this shot, Pollay is simply enjoying a healthy snack, not demanding that Kosteva start using apples-to-apples comparisons.

Kosteva acknowledged the ongoing conversation between the city and the university about the entire block. The university is still interested in creating a pedestrian plaza for the street [blocking off the area to vehicular traffic, thus eliminating all on-street parking].

However, Kosteva contended the university does not currently have a dialogue going on. He could not predict when that conversation would be restarted. Part of that conversation involves the city and the university determining the value of a parking space, which would take some time to determine. But with the start of the next term imminent, Kosteva said, the university was asking that the two spaces be removed now – in advance of settling the larger policy issue.

DDA board member Newcombe Clark responded to Kosteva by asking him to return to the podium, and told him that obviously the DDA board would never let anything trump safety, especially not money. Any hesitation about removing the spaces, he said, involved the timing. It would be great, said Clark, if politics and parking did not share any more than just the letter “P” – but they do. Clark wondered if it might be possible to separate out the two spaces from conversation before stepping into it.

Kosteva expressed some concern that it might cloud the bigger picture, as opposed to bringing it to resolution. He suggested he’d be willing to acknowledge in writing the capacity of the block for 18 on-street spaces, in the event that it is useful for the bigger picture conversation.

Clark seemed amenable to that, and noted that if the removal of the spaces turns out to be delayed past the winter term, it would be useful to monitor actual student street-crossing behavior. It’d be useful to have something as a data point that might give clarity. Clark said he didn’t mean to suggest spending thousands of dollars to pay to count pedestrians. Kosteva ventured that the university would definitely get feedback about it. The new building was designed to be able to cross the street directly. There’s going to be a lot of movement between those facilities, he said. Clark concluded by saying the good news is, the DDA had the ability to act quickly.

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: Downtown Citizens Advisory Council

Ray Detter gave the monthly update from the downtown citizens advisory council, which typically meets on the Tuesday evening before the DDA board’s monthly meeting. He described how the CAC has an annual dinner party discussion to look at goals for the next year and to review the past year. He reported that the new city administrator, Steve Powers, had attended as a guest.

CAC members were generally pleased with the city council’s decision on the previous Monday night, Detter said, not to temporarily reduce the level of support for the city’s percent for art program. The CAC would continue to work for that program, Detter said. Specific areas where Detter felt public art money might be spent included the alley connecting Liberty and Washington streets next to the Liberty Square parking structure.

Among the successes of the downtown, Detter noted the opening that day of Babo, a market on the ground floor of the 411 Lofts building on East Washington. Next door to the 411 Lofts building is the site of another residential high-rise development – The Varsity, Ann Arbor. Detter said that The Varsity was the first project to undergo review by the city’s new design review board. He said that the developer of The Varsity didn’t make all the changes that the CAC wanted, but it was a useful process.

Detter also praised the increase in the number of bike paths. The CAC supports the city’s efforts to increase pedestrian safety at crosswalks, he said. The CAC thinks the downtown library should remain downtown and supports some type of new development on top of the underground parking garage. At the meeting, Detter reported, Powers had said he’s committed to increasing the city’s tax base.

Comm/Comm: Monthly Parking Report

The report of monthly parking statistics (for October) received cursory discussion. Some decline in use was noted for the First and Washington lot – this was attributed to the elimination of that lot’s use by the DDA, given the imminent sale of the property to Village Green for the construction of the City Apartments residential project.

Comm/Comm: Construction Report

John Splitt reported that the last major structural concrete pour is done for the underground parking garage that’s under construction on South Fifth Avenue. Other pours will continue over the winter. The tower crane will disappear soon after next week. Canopies are going up on the east leg, over the stairwell and the speed ramp. No glass will be installed for the canopies until spring. For the middle phase of the project, waterproofing and backfilling continue.

For the Fifth and Division streetscape improvements, work has been focused at Fifth and Liberty, getting it cleaned up. Street lights have been put in at that corner.

Comm/Comm: Transportation

Reporting from the transportation committee, John Mouat said that Erica Briggs of the Clean Energy Coalition had made a presentation to the committee on a bike-sharing proposal. [Briggs is former director of the getDowntown program and currently serves on the city planning commission and the zoning board of appeals.] Briggs did not solicit financial support but asked for cooperation at the level of staff participation and planning. Mouat characterized the committee as supportive, but noted safety concerns expressed by board member Nader Nassif, who wondered of downtown bicycle infrastructure was adequate to support an additional large volume of bicyclists.

Mayor John Hieftje, who by statute occupies a position on the DDA board, said it was not a high priority issue, but asked for a discussion of bicycles on downtown sidewalks. Several cities, he said, have made moves to prohibit them.

Comm/Comm: Midtown Discovery

Joan Lowenstein reported on the progress that the DDA is making on the task of identifying alternate uses for city-owned surface parking lots. The task was assigned to the DDA by the city council earlier this year at the DDA’s request, in connection with negotiations over a new contract under which the DDA manages the city’s parking contract. The parcels given initial focus are the Klein’s Lot (on Ashley, between William and Liberty), Palio’s Lot (at the northeast corner of Main & William), the Old Y Lot (at the northwest corner of Fifth & William), the Library Lot (the top of the South Fifth Avenue underground parking garage), and the bottom floor of the Fourth & William parking structure.

Lowenstein reported that the work of the leadership and outreach task force continues. The process has been dubbed “Midtown Discovery” and continues work on the first phase, which is to get on the same page about what’s been done in the past by way of planning for the downtown. At the task force’s Nov. 7 meeting, they’d shared observations from a walk they did around downtown and began talking about how they perceived the area. The task force has begun talking about beginning the public dialogue.

Lowenstein announced that the DDA will receive $70,000 as part of a $3 million federal sustainable communities grant awarded to Washtenaw County. The DDA partnered with the county to obtain the community challenge grant. The DDA is working with the county to create a funding agreement. Lowenstein said the public dialogue will involve working with a consultant and the grant money would help pay for that. DDA planning and research specialist Amber Miller, who worked on the grant application, clarified that $20,000 would need to be put up by the DDA, in order to get $70,000 from the federal grant award.

Comm/Comm: Annual Report

Lowenstein reported that great feedback has been received on the annual report and state of the downtown report created this year by the DDA.

Ann Arbor SPARK, this region’s economic development agency, has floated the idea of partnering with the DDA to use part of the report in its business attraction proposals. That’s what the DDA had in mind, said Lowenstein, when staff started working on the documents. It’s a “sales document,” she said.

Some of the benchmarks have changed, Lowenstein said. In the year 2000, the downtown residential task force had identified a goal of creating an additional 1,000 units of housing in the near downtown area by 2015. Since 2000, 536 units have been constructed and 274 are under construction. When The Varsity and Village Green’s City Apartments are constructed, that will be 337 more units. That’s more than 1,110, she concluded. [The task force report also notes that: "The task force discussed a second goal of an additional 1,500 new units by 2030 but NOT making this goal a rigid recommendation, as it should be re-assessed prior to 2015."]

Comm/Comm: Graffiti

Mayor John Hieftje reported on the results of a recent targeted graffiti enforcement action. He said the city administrator will soon report on the response rate, with an enforcement map. Of those properties cited, Hieftje said, 70% were cleaned up in a week’s time. For the others, the city is working with property owners to get compliance without resorting to assessing fines. Community standards enforcement officers reported that “they didn’t get yelled at.” Board member Nader Nassif reported that he’d witnessed some of the compliance activity of graffiti getting painted over.

Comm/Comm: Police Officer Hiring

Hieftje also reported that the city council had voted at its Dec. 5 meeting to approve a contract with the Washtenaw County sheriff’s office to provide dispatching services, instead of continuing to employ its own dispatchers. The city expects to save $500,000 a year with the move. Work on the county-based police dispatching goes back 20 years, Hieftje said. DDA board member Bob Guenzel, who is a retired Washtenaw County administrator, offered his congratulations, as someone who worked on it for 20 years. Guenzel gave credit to sheriff Jerry Clayton and Ann Arbor chief of police Barnett Jones for finally achieving that.

Hieftje also said that with the new contract struck with the Ann Arbor police officers union (AAPOA), the city would realize another $440,000 in savings. Without the new contract or the dispatch consolidation with the county, the FY 2013 budget had called for a reduction of 10-12 officers, Hieftje said. He expected that those reductions would no longer be necessary. Nine officers would be retiring at the end of the year, so the first step would be to call back four officers who were recently laid off. According to the city administrator, there were 400 applications for the remaining jobs. So the city expects to be able to hire experienced officers, Hieftje said.

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

Absent: Russ Collins.

Next board meeting: Noon on Wednesday, Jan. 4, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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The details of proposed parking rate increases were announced in late October, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

The public hearing on parking rate increases came at the same meeting when the board voted to accept the audit from the previous fiscal year (2011), which included some concern expressed by the auditor that the parking fund was on the edge of a deficit. Last year, the parking system had around $9.5 million in annual operating and administrative expenses. It’s also encumbered by obligations to the city of Ann Arbor as well as all capital maintenance expenses for the parking system, making the parking fund’s expenses for last year almost $16 million against $15.2 million in revenue – the difference was made up by drawing on the fund balance reserve.

The February rate changes will have a relatively minor impact. Joe Morehouse, deputy director of the DDA, wrote to The Chronicle that he expects the February rate changes to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First and William lot permits by $10/month ($5,000).

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%). Based on the roughly $15 million in revenue generated by the public parking system last year, the parking rate increases could be expected to increase annual gross revenues somewhere between $0.54 million and $1.25 million, assuming no change in demand or capacity. However, on completion of the new underground garage on South Fifth Avenue, around 650 new spaces will be added to the system, which currently has around 7,000 spaces.

Under terms of a new parking contract, under which the DDA manages the city’s parking system, the city of Ann Arbor would receive 17% of that increased gross revenue – or somewhere between $97,000 and $226,000 more than it currently receives under the contract. For the first quarter of FY 2012 (which started July 1, 2011), the 17%-of-gross calculation for the city’s share worked out to $662,471, which would project to $2.65 million annually without any change in rates, demand or capacity.

This brief was filed from the DDA offices at 150 S. Fifth Ave. A more detailed report will follow: [link]

Deanna Relyea spoke to the Ann Arbor DDA board at the Nov. 2 public hearing on behalf of the Kerrytown District Association. (Photos by the writer.)

The hearing will continue at the board’s Dec. 7 meeting, after a Nov. 14 joint working session with the Ann Arbor city council, when the two bodies will discuss proposed increases. A vote by the DDA board on the rate increases would not come until January.

Around a half dozen people spoke at the initial opportunity for public comment on the proposed rate increases, most either downtown merchants or representatives of merchant associations. They were uniformly in support of one feature of the proposal – no extension of meter enforcement past 6 p.m. Extension of enforcement hours has been actively on the table for at least two years. Based on board discussion at Wednesday’s meeting, evening enforcement could eventually be implemented – but not for the current rate increase cycle.

Those who spoke at the initial part of the hearing were generally opposed to increasing rates, but also acknowledged the financial decisions the DDA faces. And some speakers put part of the blame for that situation on the city of Ann Arbor. Under a new contract, the city of Ann Arbor now receives 17% of gross public parking revenues, which could otherwise be put back into the parking system, reducing the pressure to raise rates. Under the contract, the DDA operates the system, and is responsible for ongoing maintenance. Rates are controlled by the DDA in consultation with the city council.

The details of proposed parking rate increases were first announced towards the end of last week, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

Highlights of the changes to be enacted in September 2012 include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours;) hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

The board’s meeting included the usual range of reports, including the quarterly financial numbers and parking report, and updates on the Fifth Avenue underground parking garage construction as well as the most recent development in the Nov. 8 sidewalk millage ballot proposal.

At the city council’s Oct. 17 meeting, the council passed a resolution clarifying how the millage proceeds would be used inside the DDA’s geographic district. And at the DDA’s Wednesday meeting, mayor John Hieftje gave the clearest public indication to date that he does not want to take a position on the sidewalk millage, saying that residents would have to “figure it out for themselves.”

The board also held a closed session, under the provision of the Michigan Open Meetings Act that allows such a session to discuss the meaning of legal advice contained in a written document protected under attorney-client privilege. 

Parking Rate Public Hearing

The main focus of the board meeting was the public hearing on parking rates and the associated discussion by DDA board members. Remarks included not just comments on the rate increases, but also questions about the need to build the underground parking garage, which is currently under construction on the so-called Library Lot on South Fifth Avenue, between Liberty and William streets. Speakers also complained that revenue from the parking system was being used to backstop the city of Ann Arbor’s general fund.

Terms of the new contract (ratified in May 2011) under which the DDA operates the city’s public parking system include a provision whereby 17% of gross revenues are paid directly to the city of Ann Arbor. The payments are made quarterly, by the end of the month after the quarter ends. So the first of those payments was made on Oct. 31. The 17% figure came to $662,471.

Parking Rate Public Hearing: Introduction

The contract between the city and the DDA, under which the DDA manages Ann Arbor’s public parking system, provides for a mechanism the DDA must use in order to implement rate increases. It involves three separate board meetings: one to announce an intent to raise rates, another to hold a public hearing, and a third for a vote.

… DDA shall not implement any increase in the Municipal Parking System’s hours of meter operation or parking rates intended to persist for more than three (3) months without first:
(i) announcing, and providing written communication regarding, the details of such increase at a meeting of the DDA Board;
(ii) providing all members of the public an opportunity to speak in a manner similar to a public hearing before the DDA Board at its next regularly scheduled meeting on the subject of the proposed increase (“Public Hearing”); and
(iii) postponing any vote on the proposed increase until at least the regularly scheduled meeting of the DDA Board after the Public Hearing.

The DDA board completed the first step of the process at its Wednesday meeting and opened the public hearing early, so that it could receive input from the public before its Nov. 14 work session with the city council.

Bob Guenzel opened the hearing by noting that the recently signed contract with the city of Ann Arbor requires that a hearing be held. Some of the rate changes are proposed to take effect in September 2012, while others are proposed for February, he said. However, the public hearing would welcome comments on both sets of changes.

Guenzel noted that the DDA board would be meeting with the city council on Nov. 14 to talk about the modifications. Guenzel went on to explain that the public hearing would be adjourned and then re-opened at the Dec. 7 DDA board meeting, so there would be time both before and after the city council work session to hear from the public. Unlike working sessions for the Washtenaw County board of commissioners, the city council work sessions have historically not provided time for public commentary.

Parking Rate Public Hearing: Public – Round 1

Maura Thomson, executive director of the Main Street Area Association (MSAA), began by asking if she needed to give her home address as Guenzel had indicated. Quipped Guenzel, “No, we know where to find you!” Thomson thanked the board and staff for their work and for their thoughtfulness in arriving at their recommendations. She said she understood the complexities the board faces. Specifically, the board needs to satisfy its financial obligations, she said, as well as the needs of the board’s “customers.”

As “customers” Thomson identified the public and downtown businesses. She called satisfying both sets of customers a “tall order.” She noted that many business were opposed to extending evening enforcement hours. She said she really appreciated the fact that the board had elected not to extend hours of enforcement. She said felt encouraged that the board had really listened to concerns of members of the MSAA and really heard them.

Maggie Ladd, director of the South University Area Association, told the board she echoed Thomson’s remarks and said she appreciated the fact that extension of enforcement of meters would not be recommended. She also said that she had no objection to the increases for parking during Ann Arbor’s art fairs. [That increase is proposed to go from $10 to $12 for entrance into the downtown parking structures. Ladd is director of the South University Art Fair, one of four fairs that take place each summer in downtown Ann Arbor.]

Ali Ramlawi introduced himself as the owner of the Jerusalem Garden restaurant on Fifth Avenue and resident of Ann Arbor. He described the construction of the underground parking garage, which is taking place immediately adjacent to his restaurant, as the “nightmare on Fifth.” He said he’d been watching actions of the board and its decisions, and the steps it’s taking. As a business owner and community resident, he said he believed that the board’s set of recent steps and decisions are “choking off” downtown. The effect of continued increase rate increases and increased complexity of the pricing structure is to choke off businesses, he said. Other than night clubs and restaurants, businesses are struggling to stay alive, he said. Extended hours of parking meter enforcement would have been the nail in the coffin.

DDA board member Keith Orr makes a point during board deliberations. Visible in the background is the mission statement of the DDA: “The mission of the Ann Arbor Downtown Development Authority (DDA) is to undertake public improvements that have the greatest impact in strengthening the downtown area and attracting new private investments. “

Ramlawi went on to describe the relationship between the city and the DDA as uncomfortable. The mission statement of the DDA is not to balance the city’s budget, he said. It’s a “weird relationship,” he said, that includes the DDA paying the city $2 million that wasn’t required under its contract, then the forgiveness of excess TIF funds captured by the DDA. He described the situation as the “lines are getting blurred.” The DDA should get back to focusing on the needs of the downtown. People need to live within their own means, he said – that’s what we all have to do as businesses and as citizens. If the city keeps “going back to the well” of the DDA, the well is going to run dry, he cautioned. He allowed that the DDA does not have an easy job, but concluded by saying that continued parking rate increases are harming business downtown.

Andrea David spoke on behalf of Herb David Guitar Studio, located on the corner of Fifth and Liberty, a few parcels down from the ongoing construction of the underground parking garage. She said she appreciated that the extension of enforcement hours into the evening was not part of the proposal. But she told the board that the construction activity had practically killed the studio, and the restaurants Jerusalem Garden and Earthen Jar. Students who take lessons at the studio can’t find parking. She asked the board to consider raising the rates only after the underground parking structure is open, not before.

J.C. Potts of Pangea Piercing told the board in a friendly drawl that everything the board does makes it unattractive to drive downtown. He allowed that it would be nice to be able to get around only as pedestrians or cyclists, but said that the No. 1 complaint he hears is about parking. It’s not the cost or lack of parking, but rather the aggressive enforcement.

Potts said that in a time of limited resources, the city seems to have a whole army of officers who are assigned to enforce parking regulations. He regularly receives tickets, he said. Pangea Piercing is expanding its business, he said, but not in Ann Arbor. They’ve chosen Pittsfield and Ypsilanti, because the parking situation is easier there. He cautioned the board that the goose with the golden eggs can be killed.

Herb David, owner of Herb David Guitar Studio, said he endorsed what everybody else had said. If the goal of the construction of the underground parking garage was to make the downtown more vital, it had in fact de-vitalized long-time businesses.

David alluded to an old blues song by Huddie Ledbetter (Leadbelly) called “Bourgeois Blues” which includes a lyric: “I tell all the colored folks to listen to me/Don’t try to find you no home in Washington, D.C./’Cause it’s a bourgeois town.” Washington D.C. might be a bourgeois town, David said, but Ann Arbor is becoming a franchise town.

He told the board that the Herb David Guitar Studio is threatened, and might go out of business. Long-time customers don’t want to deal with the construction zone situation. He told the board they’d done a lot of good things. But after 50 years in business, where each year it would increase 4-5%, now it was down 40-45%. Sunday, he said, is better than the rest of the week, because you can get free parking. “We can’t pay our bills,” he told the board. For the first time in 50 years, the store had been broken into. He attributed the break-in as caused in part by a dark alley resulting from a missing street light. They’d been given a string of Christmas lights, but that didn’t help.

Deanna Relyea spoke on behalf of the Kerrytown District Association. She thanked the DDA board for the improvements that had been made to downtown over the years. She echoed Thomson’s remarks, telling board members she was sorry that they, as the DDA board, had to deal with city of Ann Arbor’s shortfall. There were plans for the Fifth Avenue streetscape improvements [involving additional brickwork in the area of Detroit Street] that had to get axed.

Relyea told the board that raising parking rates and aggressive enforcement go together to make Kerrytown customers think twice about coming to Ann Arbor. She noted that Kerrytown has a somewhat different character from other downtown districts – it’s a destination, and people come and stay for hours. She said that merchants don’t necessarily mind rate increases, they just need to know that parking will remain convenient. She noted that the DDA mentions cities that have higher rates, like Grand Rapids and Lansing. But Ann Arbor is not like those cities, she said, and shouldn’t aspire to be that way.

Ray Detter reported to the board that the Downtown Citizens Advisory Council had gone over each recommendation for rate changes and fully supported them. No no one wants to raise rates in a time of economic hardship, he said. But the increases were necessary in order to keep the parking structures in good repair and meet the DDA’s financial obligations. He reminded the board that the parking system didn’t always pay for itself. When the DDA took over the parking system in 1992, some of the structures were falling apart. With the city council’s approval, the DDA had taken responsibility for repairing and rehabbing structures and has made the system financially self-sufficient, he said.

Parking is only a small part of the full range of the transportation options that the DDA promotes, in concert with the University of Michigan and the Ann Arbor Transportation Authority, Detter said. The analysis of that entire transportation system, he said, had led the DDA to build the underground parking garage. The nature of that construction has caused problems for neighboring businesses, he acknowledged, calling that unfortunate. The whole system has more people using it than before. He passed around some articles taken from the Ann Arbor District Library archives from 1938. There’s a photo of a woman who had a sign that read: “Keep parking meters out.” It illustrated that parking rates had always been a point of controversy. [AADL Old News: Parking]

Andrea of Pangea Piercing said she wanted to argue the point that downtown was vital. There were four stores going out of business, she said. Trying to imagine Ann Arbor without Herb David Guitar Studio made her want to cry, she said. Ann Arbor doesn’t want a CVS and a Starbucks on every corner. “We don’t want a cookie-cutter city,” she said, with a chain store everywhere. She reiterated Potts’ point that Pangea’s is opening another location, but in another city, because people don’t want to come to downtown Ann Arbor.

Parking Rate Public Hearing: DDA Board Commentary

Responding to some of the remarks made during the public hearing, mayor John Hieftje said that a speaker’s suggestion that parking meter rates not be raised until after the underground structure is open is a good idea. He noted that September 2012 is after the underground parking garage is expected to be open (it’s scheduled to open in the spring of 2012). And September 2012 is when the majority of increases affecting the average parker are proposed to be implemented.

Newcombe Clark responded to the comments during the public hearing by saying that the board was aware of all the data, and the revenue needs. “We’ve all known this was coming,” he said, noting that the board has listened to the feedback it’s heard. Not having enough parking and having parking that’s too expensive are both problems. While it’s true that the board needs the revenue, this is a function of choices the board has made, he pointed out.

Clark talked about the parking policy choices driven by “best practice or best politics.” He said the board should try to err on the side of best practices. The parking rate increases the board is proposing take a first stab at revenue generation, Clark said. As the board thinks about parking policy, the best-practices-based plan calls for evening enforcement. So that may have to come back on the table, he said. Even though evening enforcement was a best practice, it’s not best politics. Clark noted that MyBuys, which employs Clark as a manager of business development associates, has 80 downtown employees, and sees no benefit to a lack of evening enforcement. But there’s no advocate for that position. Regarding the DDA board, he noted, “We’ll be yelled at no matter what we do.”

Parking Rate Public Comment: Public – Round 2

During the time allotted for regular public commentary at all DDA board meetings, Ali Ramlawi of Jerusalem Garden reprised the sentiments he’d expressed at the public hearing. He said he wanted to reinforce the thought that the DDA is a separate agency, and needs to act independently of the city’s financial woes. He told the board to focus on their mission statement. The DDA does not exist in order to fund gaps in the city budget, he said. Ramlawi said he respected Ray Detter, but as rates increase 10, 20, 30, 70 cents, you get to a point of no return.

Ramlawi noted that people compare Ann Arbor to other cities – the fact of the matter is that Ann Arbor is a university town. The university keeps the city afloat and keeps Ann Arbor from facing some of the same problems that other cities face, he said. Ann Arbor’s success is due to the University of Michigan. For his restaurant, business is off 30-40%. [Although Ramlawi didn't make the point explicitly that he appeared to be headed for, on other occasions he's mentioned that the catering part of his business, for which UM is a client, has helped stabilize the business.]

Ramlawi said that Fifth Avenue was originally supposed to be open in time for the art fairs in the summer of 2011, but it’s still closed. [During his construction activity update later in the meeting, DDA board member John Splitt indicated that the goal is to reopen the street by early 2012.] Ramlawi said he had a feeling that some of the need for rate increases are due to previous financial irresponsibility that has “caught up with today’s balance sheet.” He repeated the point that Ann Arbor is a successful city because it has one of the best university’s in the world in its backyard. It’s time to live within our means, he said.

Andrea David of Herb David Guitar Studio also returned to the podium. She said that the city has to move forward, but she told the board to do that with caution. The DDA built the underground parking structure, but doesn’t know if you can fill it. That’s prime parking not far from Liberty Street.

Pangea Piercing’s Liberty Street location, east of Sam’s and Sole Sisters,  is near an alley entrance where parking is prohibited. 

J.C. Potts of Pangea Piercing returned to the podium, too. He took up Clark’s point, by acknowledging that people will yell at the board no matter what they do. He said he recognized the need to build more parking. But he suggested easing enforcement or keeping rates the same as a goodwill gesture. He suggested that parking could be a “loss leader.” Now, people worry about coming to park in downtown Ann Arbor, because they think they’ll get a ticket and get “harassed by five bums.” The idea would be to take less from each downtown visitor, but if there are more visitors, the city can get more revenue. Ann Arbor needs to get people to come to downtown and “see the freak show,” Potts said.

Herb David, in his second turn at the podium, asked the board if they would be facing the same problem tomorrow. Based on the projected population growth in the next 50 years, he said, no one thinks the underground parking garage would be justified. He suggested building an atrium next to the downtown library as a replacement space for artists who previously worked out of space in the collection of buildings where the new Y was built on West Washington.

Parking Rates: Board Response, Discussion

Responding in more detail to remarks made at the public hearing, Roger Hewitt said there were some misstatements he wanted to correct. Responding to the idea that Ann Arbor is being taken over by chain stores due to decisions made by the DDA board, he pointed out that many members of the board are independent business owners in the downtown. They’re acutely aware of the challenges faced by independent businesses. The board is not associated with franchises of chains, he said. [Hewitt owns the Red Hawk Bar & Grill and Revive + Replenish downtown.]

Responding to the suggestion that enforcement activities should be eased off, Hewitt pointed out that the city of Ann Arbor handles enforcement of parking regulations. As part of the new parking contract, Hewitt said, the DDA and the city’s enforcement staff now have a monthly staff meeting to coordinate the city and the DDA’s thinking on the issue of enforcement. Hewitt stressed that it’s not the DDA who writes the tickets. Hewitt also noted that with the set of proposals the DDA has made about rate increases, there’s not currently a plan to begin enforcement of parking meters in the evenings.

Hewitt said the biggest concern they’ve heard is not that people don’t want to pay – it’s the concern that if people receive parking tickets, it will send an unpleasant message. Hewitt alluded to technological advances in the parking industry that might allow fees to be charged for on-street meters without risk of parking tickets. [Hewitt was alluding to "hockey puck" sensors that would be installed in the pavement under a space and could monitor when an automobile is in the space. Patrons would pay for the time they used.] But evening enforcement is not part of the proposal for the coming year, Hewitt said.

Hewitt then ticked through each of the proposed increases. [.pdf of DDA proposed parking rate changes]

The break-even point for the parking system, Hewitt said, is roughly $16 million a year – that includes debt service as well as the cost of maintaining the structures. Hewitt said he appreciated that Detter had pointed out that the parking structures were in very bad repair when the DDA assumed responsibility for the city’s parking structures in 1992. Hewitt called Ann Arbor’s public parking system one of the best maintained municipal parking systems in the country. The maintenance costs for that system run about $2 million a year, he said. In contemplating the rate increases, the DDA is trying to balance its fiduciary responsibility to maintain the system against the issues that the speakers had identified during the public hearing.

With respect to the need to build an underground parking garage, Hewitt said that beginning about five years ago, it was noted that the parking system was reaching capacity. But measured in terms of “hourly patrons,” use of the parking system continues to grow. Hewitt clarified that an hourly patron is someone who pays hourly either at a lot or a structure.

Here’s a summary of parking revenue and hourly patronage trends over the last two years, compiled by The Chronicle from DDA monthly year-over-year comparisons:

DDA parking revenue. The red revenue line for the most recent year shows an overall pattern of slight increases compared to the blue bars of the previous year. (Image links to higher resolution file. Any errors are the responsibility of The Chronicle.)

DDA hourly parking patrons. The red parking patrons line for the most recent year shows an early pattern of slight decreases with slight increases more recently, compared to the blue bars of the previous year. (Image links to higher resolution file. Any errors are the responsibility of The Chronicle.)

Compared to five years ago, there are 450,000 more hourly patrons a year, reported Hewitt. [For the most recent year, there were roughly 2.2 million hourly patrons.] For the current monthly parking report [September 2011 versus 2010], Hewitt said, the number of hourly patrons has gone up 6%. Use of the system is now growing steadily, Hewitt said, after experiencing a somewhat flat period starting with the 2008 economic downtown. Without adding a new parking structure, Hewitt said, business couldn’t grow.

Sandi Smith said the board had heard a lot about parking demand management – which involves different pricing of parking options based on demand. She said it appeared, based on the proposed rate increases, that the DDA had stepped away from any implementation of that.

Hewitt told Smith that a “stepped approach” had been considered for off-street meters, but one barrier to that is that ePark stations had not yet been installed throughout the downtown. [The ePark stations are wirelessly-connected payment kiosks that allow different rates to be set for different geographic areas and different times of day, and to be easily adjusted. The capital expenditure of the stations has been put on hold in light of the need to meet the condition of the 17% gross revenue payment to the city of Ann Arbor, under the requirements of the new contract.]

South Ashley looking north. Meters along that section are half the cost of other meters in the city of Ann Arbor – $0.70 compared with $1.40 an hour. Those meters also allow for 10-hour parking. Most other meters allow only 2-hour parking. (Image links to .pdf file of map with current meter and rate locations.) 

Hewitt noted that on the fringes of the metered areas, the DDA wanted to establish “park and walk” meters, which are 10-hour meters that are half price. That’s consistent with the parking demand management approach. Hewitt’s comment prompted Russ Collins to recall a joke made by Geoff Larcom, director of Eastern Michigan University media relations, who says EMU doesn’t have a parking problem, it has a walking problem.

DDA executive director Susan Pollay noted that there are locations where such meters are already in place, on North Ashley, North First, and South Division. These meters would be branded, Pollay said, as part of the effort to expand use throughout the system. As the rates are increased in September 2012, Pollay said, the half-price meters would increase as well. [Later that day, Republic Parking employees were observed adding signs to the half-price meters.]

Mayor John Hieftje expressed his astonishment at the 450,000 figure Hewitt had given on the increase in the number of yearly hourly patrons compared to five years ago. He noted that there were also a lot more people using the go!pass and concluded that this reflected a lot more visits to the downtown.

Newcombe Clark wanted to know what the revenue implications are: How much money would the parking rate increase bring in? Hewitt told Clark he did not have the numbers in front of him. He said the DDA is in the process of revising its 10-year budget plan.

Sandi Smith wanted to know if historical decreases in parking system use correlated to rate increases. Hewitt told Smith he hadn’t seen use go down during the seven years he’s served on the board, though he allowed it’s been flat at times. In 2009-2010, things were flat for a little while, he said. Russ Collins recalled some history back when Main Street was dying due to the opening of Briarwood Mall, in the mid-1970s. If there was a desperate time, then that was it, he said. At that time there was an economic downturn and parking rates were doubled. Collins then quipped that WEMU’s reporter, Andrew Cluley, was not taking notes about his remarks, so it was obviously not important.

John Mouat said the message about the opening of the new underground structure should be: “We’ve got parking!” The board needs to remember that it’s a great thing to be able say that to people who’ve been trying to come downtown for years. The capacity of the new underground structure will also allow various kinds of growth, Mouat said, including allowing more downtown residents. Mouat looked forward to the time when the bonds are paid off and the DDA would be able to manage costs. He said the board has to keep in mind the future – 10-20 years from now.

Building off of Mouat’s remarks, Collins said as far as long-term vision, it would be great if the parking system were used less 30-40 years from now. When the Maynard parking structure can’t be maintained any longer, he said, it could be removed and replaced with commercial space. Building the new parking spaces underground is the right place to build them, he said. Collins said he was in complete sympathy with businesses affected by the underground parking garage construction. He quipped that he always blames architects. [Mouat, seated to Collins' right, is an architect.]

Hieftje added that it’s important to remember that the parking system is close to capacity and that some of the parking might disappear due to development. He pointed out that the Brown Block could be developed. [The entire block –bounded by Huron, Ashley, Washington and First – is a surface parking lot on land owned by First Martin Corp. and leased to the DDA.] Business owners who have been severely impacted by the underground parking garage construction obviously have grievances, he said. He recalled the lawsuit some of them had brought against the city before the project started. Hieftje then echoed the same sentiment that Hewitt had expressed – that the DDA board includes small business owners among its members. Others of the board work downtown, he said. The DDA is in every respect reflective of the small business community, Hieftje concluded.

Parking Rates: Board Response – Downtown Climate

John Splitt noted that the 2010 census indicates a 30% increase in the number of downtown residents in the last 10 years, which translates to 1,000 more people.

Reporting on transportation issues later in the meeting, John Mouat offered some anecdotal evidence of a change in the dynamics of downtown. Nancy Shore, director of the getDowntown program, had related how some employees at Google say they rarely leave downtown, and don’t own a car. Mouat said some things that people have talked about for a long time are beginning to happen.

Also later in the meeting, mayor John Hieftje cited some anecdotal evidence he’d heard at a neighborhood association meeting off of Hill Street, to the effect that there was a change in climate near downtown. One attendee, said Hieftje, described how there were now homes coming on the market that aren’t being snapped up by investors. The attendee had described it as the “steamroller” having been stopped, and attributed it to more students living downtown.

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: Quarterly Financial Report

Highlights from the first-quarter financials called out by Roger Hewitt included the dramatically lower capital expenses, because invoices for the Fifth and Division streetscape improvements haven’t been received yet. Maintenance expenses are high, because part of the underground parking structure is being paid out of maintenance, but will be reimbursed out of the bond sale.

Hewitt said he doesn’t anticipate the DDA will be paying out the $500,000 grant this year, which it made to the nonprofit Avalon Housing for the Near North housing project, due to delays in that project.

Comm/Comm: Construction Update – Underground Parking Garage

John Splitt reported that for the dogleg on the east side of the construction site, sidewalks exist and Library Lane now exists. Splitt said you can get a great look at it from behind the credit union building. The plaza-level slab was to be poured soon in a large 1,000-cubic-yard pour.

Library Lane looking east towards Division Street. The Ann Arbor District Library’s downtown building is located south of Library Lane.

The speed ramp on Division Street was being poured that day, Splitt said. He reported discussions with the design team and Christman Company (the construction manager) to get Fifth Avenue open as soon as possible. Weather does present a challenge, he said. Splitt noted that it’s possible to pour concrete in the middle of January, but it’s expensive and cost prohibitive. At minimum, Splitt said, the sidewalk on the east side of Fifth Avenue should be finished in December or January.

Comm/Comm: Construction Update – Fifth/Division Streetscape

Trees are being planted on the 200 block of South Fifth, John Splitt reported. The punch list for the streetscape project is 80% complete. He also noted that 11 sidewalk ramps were completed this year in connection with ADA compliance. By next year, they will all be complete, he said.

Comm/Comm: Sidewalk Millage

Reporting on transportation issues, John Mouat noted that on Nov. 8, city voters will be asked to vote on a 0.125 mill tax to support sidewalk repair. He reviewed the city council’s decision on its resolution of intent for use of the sidewalk repair millage.

By way of background, voters will be asked to approve two separate proposals: (1) a 5-year renewal of a 2.0 mill tax to support street repair projects; and (2) a 0.125 mill tax to pay for sidewalk repair.

Over the last five years, the city has conducted a sidewalk repair program that has included systematic inspections of sidewalks, and citations given to property owners who had sidewalk slabs adjacent to their property in need of repair. Property owners then had a choice of hiring contractors to do the work themselves or waiting for the city to do the work and getting a bill from the city. The five-year cycle took different sections of the city in turn, so that over the five-year period, the entire city was covered once with the inspection program.

At the Oct. 17 city council meeting, councilmembers considered a resolution of intent for the use of proceeds from a street/sidewalk repair millage. The council had previously considered the resolution of intent at its Oct. 3 meeting and before that at its Sept. 19 meeting.

The resolution of intent specifies that the street repair millage will pay for the following activities: resurfacing or reconstruction of existing paved city streets and bridges, including on-street bicycle lanes and street intersections; construction of pedestrian refuge islands; reconstruction and construction of accessible street crossings and corner ramps; and preventive pavement maintenance (PPM) measures, including pavement crack sealing. [.pdf of unamended Oct 3, 2011 version of resolution of intent]

At its Oct. 3 meeting, councilmembers had questions about the need to have any resolution of intent, as well as the status of millage revenue use inside the geographic area of the Ann Arbor DDA.

The resolution of intent had originally stipulated that sidewalk repairs inside the Ann Arbor DDA district would not be funded by the sidewalk repair millage, except when the sidewalks are adjacent to single- and two-family houses. A Sept. 28 meeting of the DDA’s operations committee revealed a measure of discontent on the DDA’s part about the intended restriction inside the DDA district and the lack of communication from the city of Ann Arbor to the DDA about that issue.

At its Oct. 17 meeting, the council took up the inequity identified by commercial property owners under the original language – they’d be included in the repair millage but excluded from the benefits. An amendment added the following language:

3. Notwithstanding the provisions of Paragraph II.2, if the City and the Downtown Development Authority (“DDA”) execute an agreement whereby (i) the DDA agrees to perform sidewalk repair within the Downtown Development District (“DDD”) adjacent to all properties against which the City levies property taxes; and (ii) the City agrees to transmit to the DDA annually 1/8th mill for parcels located within the DDD and not otherwise captured by the DDA; then the 2012 Street and Bridge Resurfacing and Reconstruction and Sidewalk Repair millage may be used for sidewalk repair within the Downtown Development District adjacent to all properties against which the City levies property taxes. The 1/8th mill shall be subject to the Headlee rollback. [.pdf of complete resolution of intent as amended on Oct. 17, 2011]

The original version of the resolution of intent had assumed that the DDA would repair the sidewalks within the district that are adjacent to commercial properties, based on the incremental tax capture in the DDA district for the millage. The impact of the amendment is to provide the entire millage amount to the DDA (not just the captured increment), but only if the DDA agrees to take responsibility for sidewalk repair inside the DDA district.

City councilmembers Mike Anglin (Ward 5) and Stephen Kunselman (Ward 3) have stated in the course of their re-election campaigns that they only reluctantly support the sidewalk repair millage. Stephen Rapundalo (Ward 2) has characterized the sidewalk millage as simply offering voters a choice.

Though not up for re-election this year, mayor John Hieftje stated at the DDA’s Oct. 5 board meeting that he did not think councilmembers are out in the community saying that the city absolutely needs the sidewalk millage or that it’s essential. Like Rapundalo, the mayor characterized the sidewalk millage as offering residents a choice of having the city take over the responsibility for sidewalk repair.

At the DDA board’s Nov. 2, 2011 meeting, Hieftje was somewhat more emphatic in his lack of a position on the sidewalk millage. He said that overall, he doesn’t have a particular position on the issue and said people would need to figure it out for themselves. He allowed that it would be a new tax, but the city would be taking on a new task.

Comm/Comm: Percent for Art

In his report from the Downtown Citizens Advisory Council meeting the previous night, Ray Detter said that there’d been a lot of discussion of the city’s Percent for Art program. The city council’s Nov. 14 work session will include Percent for Art as a focus, he noted. The CAC expressed its continued support of the program, he said, adding that the recent dedication of the Dreiseitl sculpture shows the program has achieved some success.

The previous day, Detter had met with other members of the task force that is working on selecting three additional pieces of art for the new municipal center. Three artists had been selected from over 100 applicants. Detter acknowledged that some in the community had expressed continued interest in selecting local artists for the city’s Percent for Art projects. Detter said that only 15 of the 100 artists who applied to create art for the interior of the municipal center were local. Those (non-local) artists who were selected were really top notch, he said. He concluded that portions of his remarks by contending that the Percent for Art program is working.

Comm/Comm: Village Green, City Apartments

Also during his report from the Downtown Citizens Advisory Council, Ray Detter addressed a future development on the western edge of downtown. Expected to be on the city council’s Thursday, Nov. 10 agenda, Detter said, would be an item to approve the sale of the city-owned parcel at First and Washington to Village Green, to build the City Apartments project. It’s a high-density project in the downtown, and would add 150 units–  a portion of which will be offered at rents affordable to tenants earning 60% of the area median income.  The project has not been easy, Detter said, but the developer made necessary design and parking adjustments and sought out input from neighboring property owners. It’s taken a long time and overcome various setbacks, he said.

Comm/Comm: Revenge of the Electric Car

John Mouat, reporting out on transportation issues, noted that there would be a screening of “Revenge of the Electric Car” at the Michigan Theater on Nov. 11-13. For two of the showings, the filmmaker Chris Paine will be there for a post-screening Q & A.

Comm/Comm: Graffiti

As part of her report from the partnerships committee, Sandi Smith said that chief of police Barnett Jones and deputy chief John Seto attended the committee’s meeting. They’d tried to give the committee a feel for what’s actually happening, compared to the perception. Smith noted that she’d heard mayor John Hieftje say that crime is going down, but incidents in graffiti and panhandling have created the perception that crime is up.

Up to now, graffiti has been been complaint-driven, but it will no longer be just a function of complaints, as the city is now planning to step up enforcement efforts. Smith noted that Anderson Paint and Fingerle Lumber are a source for a product called Elephant Snot, which is provided to downtown property owners at no cost through a DDA grant. The process works as follows:

1. A downtown building or business owner finds their building or sign tagged with graffiti.
2. They visit one of the following businesses to obtain free anti-graffiti supplies:
Anderson Paint, 2386 W. Stadium Blvd | (734) 995-4411
Fingerle Lumber, 617 S. Fifth Ave | (734) 663-0581
3. Necessary information includes business name and address to ensure the location is within the DDA boundary, and thus eligible under the grant program. (DDA boundaries)
4. Graffiti is removed or covered up in accordance with the city ordinance.

Comm/Comm: City-Owned Surface Lot Redevelopment

Sandi Smith said the partnerships committee had received a review of a meeting of the leadership and outreach committee, which is working on a public engagement process for thinking about alternative uses of city-owned surface parking lots in the downtown area. [The city council had given direction to the DDA to undertake that work, after long wrangling that included the negotiation of the parking contract under which the DDA operates the city's public parking system.]

Smith described the committee as a bunch of people not typically around the table. In response to some of the proposed public engagement events, Smith said, some of the group had responded by saying, “My friends wouldn’t come to this.” That group had immediately challenged the DDA with a fresh perspective, Smith said.

Comm/Comm: Regional Rail

Mayor John Hiefjte reported that he’d attended a meeting sponsored by the Michigan Environmental Council (MEC), which had included Michigan Gov. Rick Snyder, assistant secretary of the U.S. Dept. of Transportation John Porcari and administrator of the Federal Railroad Administration Joseph Szabo, as well as chief executive officer of the Michigan Chamber of Commerce Rich Studley. [The president of the MEC is Chris Kolb, a former Ann Arbor city councilmember and former state representative for District 53.]

Hieftje characterized it as an interesting bipartisan mix of people. He said now is the best chance in the last 100 years that Michigan has had to improve its rail system. He reported that Snyder had said Ann Arbor’s Amtrak station is in the wrong place. [Hieftje supports moving the station to a location currently used as a parking lot in Fuller Park, to create an multimodal facility called Fuller Road Station. The first phase of FRS would be a parking structure used primarily by the University of Michigan, and bus terminals.]

For a recent Chronicle roundup of various transportation initiatives, see “Washtenaw Transit Talk in ‘Flux‘”

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

Absent: Joan Lowenstein

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

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Highlights of the proposed changes include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours;) hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

No extensions of enforcement hours are a part of the proposal.

At its Nov. 2, 2011 meeting, the DDA board will formally announce its intent and open a public hearing on the issue, which will remain open through its Dec. 7 meeting. A DDA board vote would not take place until January. After a DDA board vote, the rate changes would not require additional city council approval.

The conditions of the DDA’s contract with the city of Ann Arbor, under which the DDA operates the city’s public parking system, require announcement of intended rate increases and provision of details in writing at a DDA board meeting. At the next board meeting, a public hearing must take place. And the board may not vote on the proposed increases until the board meeting after the public hearing.

In a telephone interview, executive director of the DDA Susan Pollay indicated the plan to open the public hearing at its Nov. 2 meeting, instead of waiting until Dec. 7, was motivated by a desire to receive input from the public before a joint work session with the city council and the DDA board scheduled for Nov. 14. The written announcement from the DDA also encourages input sent via email to dda@a2dda.org.

The proposed parking rate changes also include, among other items, changes to meter bag rates and entrance rates for Liberty Square and 415 W. Washington, which would be implemented in January. [.pdf of DDA proposed parking rate changes]