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

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

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

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

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

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

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

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

Underground Parking Garage

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

Underground Parking Garage: Impact of  Construction on Businesses

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

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

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

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

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

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

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

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

Underground Parking Garage: Construction Update

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

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

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

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

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

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

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

Parking Revenue: go!pass Program

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Parking Revenues: Status of getDowntown Staff

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

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

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

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

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

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

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

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

Regular Parking Report

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

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

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

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

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

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

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

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

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

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

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

The Varsity at Ann Arbor

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

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

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

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

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

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

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

Communications, Committee Reports

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

Comm/Comm: Retail Recruitment

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

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

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

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

Comm/Comm: Energy Grants

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

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

Comm/Comm: Future Use of City-Owned Lots

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

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

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

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

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

Comm/Comm: Fruit, Vegetable Bike Racks

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

Comm/Comm: LED Lighting Company

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

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

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

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

Annual Meeting: Officer Elections

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

Gary Boren, newly elected chair of the DDA board.

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

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

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

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

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

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

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

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

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

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

Annual Meeting: Committee Mergers

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

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

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

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

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

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

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

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

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

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

Annual Meeting: Tokens of Appreciation

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

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

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

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

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

Absent: Sandi Smith.

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

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Over the last half decade, Ann Arbor’s annual spring budget conversation has evolved to include a discussion of public parking system revenues.

In discussions about parking revenue, it’s been suggested that what the city of Ann Arbor is proposing is the equivalent of a tax on downtown parkers. (Photo illustration by The Chronicle. This is not what Ann Arbor parking meters actually look like. Yet.)

This year is no exception. The city council’s public hearing on the budget takes place at its May 2 meeting, with a vote on the 2012 fiscal year’s budget scheduled for May 16. At that May 2 meeting you’ll also hear the city council discuss revenues from the public parking system. The board of the Ann Arbor Downtown Development Authority – which manages the city’s public parking system – will meet at noon the same day to ratify its side of a contract renewal.

As likely as any other scenario is an offer from the DDA for the city to receive 17% of gross revenues from the public parking system for each year of an 11-year term. But that offer stands a decent chance of getting rejected by the city council. The city’s last bargaining position was 18% for a 10-year term and multiple three-year renewals.

Public parking revenues were already part of council deliberations at a city council budget work session on April 11, when city administrator Roger Fraser had given a dress rehearsal of his budget proposal. At the work session, councilmembers and Fraser played out a scene, in which councilmembers offered up questions to Fraser to elicit this conclusion: If the city does not extract enough revenue from the city’s public parking system, the city will need to lay off additional police or firefighters – four this year and two the following year.

The scene was reprised on April 19, when the city’s budget was formally premiered. The budget did not appear to depart in significant ways from the department-by-department budget impacts that city managers have presented to the council at a series of work sessions since the beginning of the year.

On April 19, it was the city’s CFO Tom Crawford (later in the meeting to be appointed interim city administrator) who played the role of the “numbers guy.” So it was Crawford who gave the recommendation in response to councilmember prompts: Without sufficient revenue from the public parking system, he would recommend laying off an additional four public safety officers. That’s in addition to the five police officers, three other non-officer positions in the police department, and five firefighters who are already slated for layoff.

Councilmembers Christopher Taylor, Carsten Hohnke, Marcia Higgins, Stephen Kunselman and mayor John Hieftje played starring roles in their portrayal of elected officials that evening. But more to the point of this column, I wonder who the city council’s imagined audience is for this sort of theater? Presumably it’s for an audience that pays the price of admission. But in Ann Arbor, it’s an audience that typically doesn’t pay much attention: the city’s shareholders.

Yes, that’s exactly the word I want. Shareholders.

I want that word in order to give myself some room to think about calling the voting public “shareholders” instead of “voters” or “residents” or “citizens.” It’s not because Michigan Gov. Rick Snyder campaigned on a slogan saying he’d run government like a business, and has continued that kind of talk since taking office.

It’s because I think a different word, “stakeholder” – as it’s used in Ann Arbor’s public discourse – has lost its original contrastive meaning. It was coined originally not as just a shorter way of saying “people who have a stake in this thing.” It was coined almost a half-century ago specifically to contrast with the term “shareholder.” And I think it’s worth reminding ourselves of that contrast.

Shareholders, Stakeholders

Back in 1963, the term “stakeholder” was coined in an internal memo at the Stanford Research Institute (now SRI International). Stakeholders included “shareowners, employees, customers, suppliers, lenders, and society.” At the time, elevating those groups in importance was a fairly radical challenge to the prevailing view in business circles that shareholders are the only stakeholders that truly matter when company mangers make choices.

Writing in his 2003 book “Authentic Leadership: Rediscovering the Secrets of Lasting Value” William George, a professor of management practice at Harvard Business School, describes the stakeholder model of a business and how he learned about it:

… the criterion for measuring the success of our leaders should be how well they serve everyone that has a vested interest in the success of the enterprise. This is known as the stakeholder model. I was first introduced to it by Henry Schacht, the CEO of Cummins Engine, at a 1970s conference on corporate responsibility. Schacht outlined the stakeholder concept of serving all those who had a stake in the enterprise:

• Customers
• Employees
• Shareholders
• Suppliers
• Communities

… Serving all your stakeholders is the best way to produce long-term results and create a growing, prosperous company.

Schacht’s predecessor and mentor, J. Irwin Miller, one of the authentic leaders of this era, initiated the stakeholder model. Miller had a keen appreciation of the importance of building a motivated employee based and a thriving community in the company’s small hometown of Columbus, Indiana, in order to serve its customers, its suppliers and its shareholders. Although Miller was not widely known outside business circles, his picture once appeared on the cover of Fortune magazine during the Watergate era with the caption, “This man should be President,” noting that the values and character Miller represented were precisely what America needed in its leaders.

Many of my elementary school classmates in early 1970s Columbus, Ind. had parents who worked for Cummins – so they were Cummins stakeholders. In 1957 the Cummins Foundation had paid for architect Harry Weese to design the Lillian C. Schmitt elementary school, where I attended kindergarten through sixth grade. So even though my own family did not have a direct connection to Cummins, we lived there – so we were stakeholders, too, and we derived a specific return from our stake in Cummins.

I think it’s easy for progressive Democrats to look at the example of Cummins Engine and conclude that yes, that’s what corporate responsibility should be – decisions should be made by considering not just shareholders, but also stakeholders.

What happens, though, if we try to apply the idea of a stakeholder model of business to our local government? Who are the shareholders? Who are the other stakeholders besides the shareholders in a local government? It makes some kind of sense to think that among the shareholders are property tax payers – but not all of them get to vote. So perhaps it is simply voters who are the best pure analog to shareholders.

If we believe in a stakeholder model of business, and think it’s appropriate to apply a business model to local government, that leads to a somewhat startling conclusion: We should expect city management decisions to be based not just on the short-term interest of voters.

One way to reject that conclusion is to reject the premise that government should be run anything like a business. But here in Ann Arbor, we do appear to believe in government as a business – inasmuch as the term “stakeholder” is sprinkled easily through the talk of residents, as well as our appointed and elected officials.

From the recent resolution adopted by the city council, which tasked the Ann Arbor Downtown Development Authority with leading a process to explore alternate uses of a limited set of city-owned downtown surface parking lots [emphasis added]:

• Hold meetings with business and community stakeholders to determine professional assessment of the Parcel-by-Parcel Plan

For some folks, that language was not inclusive enough of “the public” and two additional clauses were strengthened with the word “robust” – which provoked some debate among councilmembers. From the resolution that was eventually passed:

• Solicit robust public input and conduct public meetings to determine residents’ Parcel-level downtown vision
  …
• Solicit robust public input and confirm the extent of community consensus for the Parcel-by-Parcel Plan through public meetings and surveys

A different way of including “the public” or “the people” would be to prefix “shareholders and” anytime the word “stakeholder” is invoked. And once we’re speaking the language of “shareholders and stakeholders,” then we have a way of talking about different points of view that’s closer to neutral than “the people” and “special interest groups.”

So that’s what I’d like to do in considering the question of how revenues from the public parking system should be spent.

Parking System Revenues: Background

The conversation about revenues from the public parking system is one that the city of Ann Arbor has successfully framed as a question of control: Should it be the city council or the Ann Arbor Downtown Development Authority that decides how to spend the revenues from the public parking system?

The Ann Arbor DDA is a tax-increment finance district, formed under the state’s Downtown Development Authority Act 197 of 1975. The DDA does not levy property taxes directly, but rather “captures” them from other taxing authorities. The DDA does not capture the entire tax on a property – it captures just the tax on the difference (the “increment”) in the baseline value and the value of improvements to the property. The DDA does not capture taxes on the appreciated value of the property.

While a downtown development authority formed under Michigan’s state statute is a “public body corporate” that can sue and be sued, a DDA is not empowered by state statute to run a public parking system.

But since 1992 it has been the DDA that has managed the city’s parking system by contractual agreement with the city. The shift of responsibility from the city to the DDA was motivated by the fact that some of the city’s parking structures had fallen into such a state of disrepair that they needed to be demolished or dramatically renovated. Two examples are: (1) the deck at Fourth & Washington  – demolished and now rebuilt; and (2) the deck at First & Washington – demolished, with the parcel waiting for developer Village Green to finalize its $3 million purchase agreement, for a construction start this summer on Ann Arbor City Apartments, a nine-story residential project that includes a parking deck on the first two floors.

Skipping ahead to 2005, in that year the city and the DDA revised a parking contract that they’d signed in 2002, so that in addition to a payment to the city’s street repair fund, the city would receive $1 million per year from parking revenues in “meter rent.” As part of that 2005 agreement, the city had the option of requesting an accelerated payment of $2 million per year – as long as the total amount paid to the city did not exceed $10 million.

Somewhat predictably, the city requested the maximum per-year payment of $2 million in each of the first five years, and then asked to renegotiate the contract. At public meetings over the last year, DDA board member Sandi Smith (who’s now also a city councilmember) has stated that there was no doubt in her mind in 2005 that the city would max out its allowable payment, then ask to renegotiate.

Even without negotiating the contract, the Ann Arbor DDA elected last year, in 2010, to transfer $2 million to the city that was not required under the terms of its contract with the city. The city administrator’s proposed budget last year had not factored in the $2 million, and had proposed police and firefighter layoffs. In that drama, the city council portrayed itself as hard-working heroes who used the additional “unexpected” revenue to avert layoffs in the police and fire departments.

That allowed the mayor last year to campaign for re-election on a perfect record of never having laid off a police officer in the course of a decade in office. Up to this year, the reduction in Ann Arbor’s police force has been achieved through attrition and early-retirement buyouts. In the last decade, the city council has never allowed layoffs to be a consequence of collective bargaining that did not achieve desired savings.

Parking System Revenues: Control, Money

The recent negotiations over the use of public parking revenues have been handled by committees from the city council and the DDA board. In concept, those committees originated in January 2009. But discussions between them did not become public until the summer of 2010.

The discussion about the contract revision can be divided into broad categories: (1) control; and (2) money.

For the first category, the two committees have settled on contractual language that includes the following key points, which are not included in the current contract:

1. Rate Setting: DDA would have the authority to set parking rates, with certain requirements on public input before rate changes would be changed. Currently the city council can veto rate changes – that veto would not be a part of the new contract.
2. Geographic Area: The geographic area where the DDA will have authority to manage the parking system would be precisely defined. The motivation behind this language is to prevent situations like one in 2009, when the city enacted a plan to install meters in additional locations where the DDA felt meters were inappropriate for a variety of reasons.
3. Communication: A standing committee with representatives from the DDA and the city would be formed to coordinate parking enforcement activity with rate policies. Regular reporting by the city to the DDA on enforcement and street repair activities would also be required.

For the financial part of the contract, the committees have moved away from a collection of separate payments to a percentage-of-gross arrangement. The separate payments that are currently reflected in historical practice, if not under the terms of the contract are: (1) meter rent – $2 million per year; (2) street fund – currently $840,000 per year with a formula-based increase; and (3) revenue from 415 W. Washington and Fifth & William surface parking lots – $170,000 per year.

The two negotiating committees have tried to arrive at a percentage-of-gross number that would roughly approximate (over the life of the contract) the city’s withdrawals from the public parking system in recent years.

Earlier this month, the positions of the two bodies on the percentage of gross public parking revenues that the city should withdraw had reached an impasse of sorts. The city council’s position, as reflected by its committee, was 16% in the first two years of a 10-year contract and 17.5% in remaining years – the 16-16-17.5 scenario. The DDA’s committee, after going back to the full DDA board on two occasions, had raised its offer to 16% in all years of a 10-year contract – a flat-16 scenario.

By way of orientation to the scale of the parking revenue fund, its projected revenues for FY 2012 are around $16 million. Fixed costs for the DDA’s subcontractor, Republic Parking, come in at around $7.4 million. The DDA typically allocates a little over $2 million per year to its maintenance program for the parking decks. Debt service paid out of the parking fund and a transfer to the DDA’s bond fund totals around $4 million. An annual grant to fund the go!pass program for getDowntown takes another $0.5 million.

The DDA’s position is based on the financial stress the parking fund and the entire organization would be under, if the DDA were to agree to the higher percentage-of-gross figures. To relieve pressure on the parking fund, the DDA has already deferred its maintenance schedule for the decks and has decided to allocate a portion of the bond payments for the Fifth Avenue parking deck from its TIF fund. On a flat 17% scenario, the parking fund would show a balance of -$157,000 in FY12 and -$327,000 in FY13.

At the April 19 city council meeting, councilmembers instructed their committee to go back to the DDA, not with support for the committee’s prior negotiating position, but rather with an escalated request: 18% of gross revenues every year.

This kind of “negotiating” strategy leaves room to wonder if the city’s collective bargaining conversations with its unions are equally bizarre – where the city seeks to increase the gap between established positions, instead of closing it.

But leaving aside for a moment the city’s schizophrenic negotiating strategy, it’s worth thinking about the basic concept behind a percentage-of-gross arrangement as opposed to some kind of flat payment.

The idea is that the interests of the DDA and the city are aligned under such a scheme – because revenues to both organizations increase or decrease in parallel. And there’s no built-in check on rate increases – on a percentage-of-gross arrangement, both the DDA and the city have an interest in seeing parking rates be set as high as possible without causing demand to decrease.

Otherwise put, with respect to public parking system revenues, the percentage-of-gross arrangement gives the city and the DDA a parallel stake in the system.

Parking System Revenues: Shareholders, Stakeholders

The city and the DDA have historically conceived the issue of public parking revenue as one about organizational stakeholders – the city of Ann Arbor versus the DDA.

Portraying the question as the competing interests of organizational stakeholders works to the city’s advantage for at least two reasons.

First, many Ann Arbor residents have a built-in skepticism of the DDA. Why? Because its board members are appointed, not elected. Of course, it is elected officials who appoint DDA board members – nominations by the mayor and confirmation by city councilmembers. But that additional layer of accountability makes some Ann Arborites uneasy. It’s that audience to which councilmember Stephen Kunselman was playing when he said at the council’s April 19 meeting that he didn’t think there was a single Ann Arbor resident who was interested in giving the DDA more control over the city’s public parking system.

Second, if the conversation is defined as being fundamentally about the competing interests of two stakeholder organizations, then it’s fair to ask: Which organization’s financial health should be given priority – the DDA’s or the city’s? It’s on that basis that much of the conversation unfolded at the city council’s April 19 meeting. City councilmembers were keen to portray the city’s undesignated fund reserve as taking priority over the DDA’s fund balances.

But what if we took very seriously the idea that this is not a question just about two organizational stakeholders, but rather one about a whole range of stakeholders – as well as shareholders?

I’ve made this point before, in a column written last year:

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

With respect to decisions about how public parking revenues are spent, the shareholders include at least the voting public in Ann Arbor. And if the decision is made based purely on the short-term interest of the shareholders, then excess parking revenue would likely be invested in the city’s general fund to pay for expenses like administration, the city attorney’s office, parks, police and firefighters. Certainly, I think it’s fair to say that most councilmembers perceive that this is the majority view of the shareholders.

But if we adopt a stakeholder model of governance, then it’s not just the short-term voting public’s interests – i.e., the interest of shareholders – that elected representatives should consider. On the stakeholder model, they should consider the long-term interests of the shareholders as well as the interests of the stakeholders.

So who else, besides the voting public, count as stakeholders in the public parking system? It’s not hard to come up with examples: businesses located downtown whose employees want to drive to work; the employees of those businesses; retail businesses whose customers want to drive and park downtown; downtown property owners who want to be able to lease their buildings to tenants who desire parking availability; downtown residents who want to own a car and store it close by for occasional use.

The point here is not to try to make an exhaustive list. It’s simply to point out that the decision about how public parking system revenues are spent should include at least all these stakeholders. And if we really believe in a stakeholder model of governance, then we can’t simply say: Well, yes, all those groups are also stakeholders with legitimate interests, but ultimately, the short-term interest of shareholders trumps that of mere stakeholders.

At a March 28 meeting of the council and DDA committees, Roger Hewitt, a DDA board member, identified downtown parkers as a group of stakeholders for which the DDA has historically been an advocate. Over the last several months of committee meetings, Hewitt has displayed increasing frustration with the fact that the DDA’s position as a lobbyist for downtown parkers puts it in a situation where it cannot succeed – because the city’s eye is only on the short-term revenue from the system.

Hewitt himself is a downtown business owner – of Red Hawk Bar & Grill, Revive and Replenish. On March 28, he pointed to a contrast between his employees, who must pay for parking, and the beneficiaries of the parking revenue when it’s withdrawn from the public parking system by the city. The beneficiaries, Hewitt said, are city workers who enjoy salary and benefits far exceeding what his own employees could hope to achieve. Hewitt echoed the same sentiment on April 27, at a DDA operations committee meeting [officially known as the "bricks and money" committee].

Translating Hewitt’s point to the language of shareholders and stakeholders: While city employees are certainly stakeholders in the public parking system, so too are downtown employees who pay to park. So part of the conversation about the use of public parking revenue should be about how to balance appropriately the interests of those two stakeholder groups.

As part of that same conversation on March 28, Hewitt’s frustration was evident when he floated a proposal to eliminate the need for an annual battle about the amount to be transferred from the public parking system revenues to the city:

Hewitt’s “Take As Much as You Need” Proposal: Each year the city informs the DDA what dollar amount of public parking revenue it needs for the upcoming year. The DDA sets rates as high as necessary to generate that amount of revenue.

In connection with that proposal, Hewitt also raised the specter of signage in parking structures and on parking meters with a pie chart indicating something like “N% of your parking dollar goes to the city of Ann Arbor’s general fund.”

It’s fair to say that the councilmembers at the table – Carsten Hohnke, Christopher Taylor and Margie Teall – were flummoxed when Hewitt floated that proposal. In scrambling to reject the idea politely, they essentially argued that in spirit that’s what the contract with a percentage-of-gross arrangement was attempting to formalize – the only difference was the need for the city to articulate each year what amount of parking revenue it needed.

The explicit take-as-much-as-you-need idea also received little traction from the DDA board when Hewitt floated it at a March 30 meeting of the DDA’s operations committee. Part of the reason I think it foundered was this: It would have made completely transparent the relationship between parking revenues and the city’s general fund. That’s a political cost the city council is unwilling to accept, because it would highlight the fact that it is a body that lacks discipline.

Discipline

Part of the fundamental concept of a TIF authority like the DDA is that certain tax revenues are not put through the regular budget process of the taxing authorities whose taxes are “captured” by the TIF. This very fact is objectionable to some of Ann Arbor’s shareholders. In his last two city council campaigns – for the Ward 5 city council seat currently held by Carsten Hohnke – John Floyd has raised exactly this issue.

The way Floyd sees it, investments in the downtown should be able to compete with investments elsewhere in the city as part of the regular budgeting process for the city and for the other taxing authorities whose taxes are captured. On Floyd’s view, if the city council (or the Ann Arbor District Library board, or the Washtenaw Community College board, or the AATA board, or the Washtenaw County board of commissioners) sees fit to make investments in Ann Arbor’s downtown as part of their regular budgeting process, then it will do that fair and square.

Historically, the city has elected to contract with the DDA to operate its public parking system – in a way that puts at least some of those public parking system revenues in the same category as TIF capture. That is, public parking revenues are, by contract with the DDA, not all subjected to the regular budgeting process of the city. Instead, decisions about the spending of parking revenues are made outside of the city’s regular budgeting process.

One way of thinking about both TIF capture and contractually-obligated public parking system revenues is that they’re both a way for the city to self-impose a certain discipline on itself. That discipline is essentially to make a long-term commitment to investments in the downtown and in the public parking/transportation system – investments that prioritize long-term value for all stakeholders over short-term value for shareholders. For example, the disciplined approach is one that leads the DDA to invest parking revenue to subsidize bus passes for downtown employees through the go!pass program, which is administered by the getDowntown program.

Imagine a regular budgeting process that asks shareholders to choose between (1) reduced park maintenance and fewer assistant city attorneys; and (2) eliminating free bus rides for employees of downtown businesses. I think that an accurate representation of short-term shareholder interests would favor park maintenance and city attorneys every single time. That would be all the more true if you set it up as a choice between police officers and free bus rides.

And that’s exactly why I think the choice to self-impose this kind of discipline is a good one. The fact is that we as a community have made a choice for this kind of discipline – by establishing a DDA. And the city council in 2005 made an apparent choice for discipline by limiting its use of parking revenue to $1 million a year. One could imagine self-imposing a different kind of discipline – one that would require that we hew to the short-term interests of shareholders. However, we haven’t done that in any explicit way.

The Ann Arbor city council is not, as a group, very disciplined. Instead of living with its choice to limit itself to $1 million a year in parking meter rent, it built into the contract with the DDA the option to withdraw $2 million per year, until it reached its limit. And now the council has decided to take the approach of simply withdrawing as much parking revenue as it can.

A disciplined city council might have opted back in 2005 to say: “Okay, we need to align our labor and budget strategy; if we can’t get the kind of collective bargaining concessions we need from unions for their health care and pension costs, then we’ll reduce staff proportionately based on the cost of those benefits.” It’s only this year that we’ve heard the city administrator take that fairly obvious step.

Instead of exercising discipline, the city council has chosen over the last half decade to avoid layoffs of public safety workers – either by paying for early retirements or by using public parking system revenues to maintain staff levels.

It’s not surprising that they’ve chosen an undisciplined path as a body – some of them are undisciplined individually. To illustrate, last year at the council’s Jan. 19, 2010 meeting, mayor John Hieftje – by the description of two of the mayor’s strongest supporters on the council, Carsten Hohnke and Christopher Taylor – showed “leadership” by choosing to declare publicly that he would be offering a voluntary give-back of 3% of the salary he receives for the job.

That night, Hohnke and Taylor clearly stated their willingness to participate in the 3% giveback, as did some other councilmembers. Except for Sabra Briere, Stephen Kunselman and Mike Anglin, all councilmembers eventually (either that same evening or else at subsequent meetings) seemed to give a public indication that they’d also be participating in the 3% giveback. It turns out that even Briere also wrote a check, but not for 3% – it was for $100, or a bit over a half percent.

On Feb. 22, 2011 – more than a year after the public promises were made – The Chronicle inquired with the city’s financial office about the status of those payments. Not all had paid. But by March 7, 2011, all those who said they’d participate had finally made good on their commitment – it took The Chronicle’s inquiry to get them to follow through. According to city staff, it had been the expectation of some councilmembers that they would be invoiced with an incremental payment plan. And apparently when they didn’t receive an invoice from the city, they didn’t have the discipline to make the payments on their own.

So far this year, the mayor has not chosen to announce a 3% give-back. So it’s somewhat ironic that the chair of the council’s labor committee, Stephen Rapundalo, has stressed publicly that the city’s firefighter’s concessions made last year were only for the six months remaining on their contract. Under collective bargaining laws, of course, the firefighters continue to work under the contract concessions they agreed to. Councilmembers so far have not expressed any eagerness to continue their voluntary 3% give-back through this year.

Political Reality

The stark reality of the politics concerning public parking revenues is that the decision will be made as a negotiation between the city council and the DDA – which will likely not involve any deep discussion of stakeholders, shareholders or discipline.

At the Monday, April 25 meeting of the two committees from the DDA board and the city council, those around the table reflected on the city council’s performance a week before, on April 19.

That was a meeting where the council had voted to direct its own negotiating committee to escalate the city’s expectation of percentage-of-gross parking revenue payments – upward from the city committee’s previous position to a flat 18% in all years of a 10-year contract. That direction came after the council entertained an even higher percentage-of-gross public parking revenues for use in the city’s general fund – 19%.

On Monday morning, DDA board member Roger Hewitt thanked Christopher Taylor – because Taylor had been the only member of the city’s committee who had displayed the discipline to vote the committee’s position against the rest of the council. Hewitt pointed out to Carsten Hohnke that Hohnke himself had abandoned the city committee’s position and voted for the amendment of the resolution to 18%, as well as for the resolution itself. Margie Teall had voted against the amendment, but ultimately for the resolution.

Hohnke’s explanation to Hewitt was that he’d argued for the committee’s position – but when it became apparent that the consensus of the council was not aligned that way, he felt compelled to stand with his fellow councilmembers. He characterized his decision as the same one that Teall had made one step later and that Taylor had made two steps later – that very morning, in choosing to accept the council’s direction to continue negotiations based on the 18% figure.

Hewitt expressed concern that it was not just the financial part of the contract that was in doubt. Based on sentiments expressed at the council’s April 19 meeting, he wondered if there was adequate support on the council to ratify the non-financial aspects of the contract – those that involved giving the DDA more control over the parking system it is supposed to manage. Taylor tried to downplay the sentiments that had been expressed by some councilmembers (like Stephen Kunselman) as those of “outliers.”

Taylor suggested to Hewitt that for the non-financial parts of the contract, he could count four votes for sure: the three committee members (Taylor, Hohnke, Teall) plus Sandi Smith, who serves on both the DDA and the city council. Taylor ventured that without wild speculation, one could come up with two more votes, for the six (out of 11 councilmembers) they’d need to ratify the contract.

However, at the DDA’s operations committee meeting two days later, on April 27, Sandi Smith indicated that she felt like nobody really cared about the conversation the DDA was having over the percentage-of-gross figure, because it was going to be “shut down” on May 2 by the council. She doesn’t think there’s sufficient support for the non-financial aspects of the contract for the council to ratify it.

The operations committee also entertained some discussion of the “nuclear option” of dissolving the DDA, to which Carsten Hohnke had vaguely alluded at the April 25 meeting. That allusion came in the context of comments made by DDA board member Russ Collins. Collins noted that if “bombs are thrown over the transom” in order to create political movement, that thinking in cartoon terms, sometimes it’s best to catch them and throw them back. Hohnke told Collins that what Collins might be detecting among councilmembers is this: One could come to the “not irrational conclusion” that there’s an alternative available to provide a better net return.

At the April 27 DDA committee meeting, Leah Gunn observed that if the city wanted to dissolve the DDA it could do that – but Smith labeled that as a false argument. It was not financially realistic, she said. However, back in December 2009, the city’s chief financial officer Tom Crawford told the city council at a budget retreat that dissolving the DDA would result in a net positive to the city’s general fund of $700,000 per year. It’s not more partly because the DDA has committed $0.5 million per year in TIF revenue to help make bond payments on the city’s new municipal center.

In any event, the DDA’s operations committee decided that it would put a resolution before the full board for the noontime meeting on Monday, May 2 to ratify a new parking contract. That contract will include a percentage-of-gross figure of 17% in every year of an 11-year contract, and one 11-year renewal option. The somewhat odd 11-year number corresponds to the currently scheduled lifetime of the DDA, which goes through 2033. Based on the conversation at the operations committee meeting, it appears there could be attempts to amend that proposal at Monday’s board meeting. Hewitt indicated that he’d been led to believe there was enough support on the council to approve the 17% figure.

The DDA’s operations committee stressed that the board’s ratification of the contract on May 2 would be contingent on the city council’s ratification of the entire contract – which it will consider later the same day, at its evening meeting. The newest member of the DDA board, Bob Guenzel, noted that if the city council chose to alter the non-financial language or the financial figure, that would amount to a counteroffer, and would not bind the DDA based on whatever the board had ratified.

In any case, there appears to be growing sentiment on the DDA board that if the city council does not ratify the parking contract in unamended form, it might be best to just let the existing contract run its course. It currently runs through 2015, with a three-year renewal option.

For example, at the April 25 meeting, Collins indicated that he believed running the parking system was actually a distraction to the DDA. He said his understanding was that one of the DDA’s “most politically progressive board members” was content to leave things the way they are. And at the April 27 meeting, DDA board member John Mouat wondered if they’d reached a point where the DDA should just let the city take back the parking system.

On the scenario where the current contract runs its course, the city’s revenue from the public parking system would be $2 million less per year than what it’s received in the last few years – though the city would still receive roughly $1 million per year (the payment to the street repair fund, plus payments from 415 W. Washington and Fifth & William surface parking lots).

But if the council does not ratify the same contract as the DDA on May 2, some councilmembers reportedly feel they have another option that stops short of dissolving the DDA. That option would be to simply transfer the funds from the DDA to the city as part of the budget resolution that council will approve on May 16.

In 2007, the city council amended the DDA’s budget using a simple resolution – but on that occasion, the change did not result in a transfer of funds. If the council did undertake a fund transfer, it would sure be interesting to see what happened next. On that kind of scenario the financial transaction would still need to be effected by the DDA. The DDA maintains its own funds in its own bank accounts.

The DDA’s board chair would need to sign the check. And it’s a check that would need to be endorsed, ultimately, by a majority of the city’s shareholders.

Seated is Roger Fraser, who attended his last Ann Arbor city council meeting on April 19 as city administrator – he gave a formal presentation to the council of the FY 2012 budget. He’s chatting before the meeting with the city’s chief financial officer, Tom Crawford, who was appointed interim administrator later in the evening. He’s not telling Crawford: “Whatever you do, don’t let the council tie your hands, see?” (Photos by the writer.)

After public hearings on the two medical marijuana laws, the council did not deliberate long in deciding to postpone both votes until its next meeting, on May 2. Substantive amendments that had been presented to councilmembers late that day for consideration made them reluctant to attempt grappling with the amendments in detail. The May 2 vote on the two laws will likely count only as their initial approval, assuming the amendments are adopted at that meeting. The laws would then need an additional final reading after May 2 before they are enacted.

A tweak to the city’s panhandling ordinance was given its second and final approval at the April 19 meeting. That change to the existing ordinance had come as a recommendation from a task force that worked for six months on the issue, following up on a longer effort in the early 2000s that had led to adopting the language in the existing ordinance.

The longest deliberations of the night involved a resolution of instruction to the council’s “mutually beneficial” committee, which is currently negotiating a new contract under which the Ann Arbor Downtown Development Authority would continue to manage the city’s public parking system. The direction given to the committee was not to stay firm with its previous bargaining position, but rather to escalate the city’s expectations for revenues from the public parking system.

Previously, the city’s committee had taken the position that the city should receive 16% of gross parking revenues in the first two years of a 10-year contract, and 17.5% in remaining years. That compared with the DDA’s position that the city should receive a flat 16% across all years. But at the meeting, the council voted to direct its committee to take the position that the city should receive a flat 18%. The council’s deliberations included comments directed towards the DDA that could fairly be described as inflammatory.

Called to the podium to comment on the parking revenue figures and the DDA’s overall financial health was the city’s chief financial officer, Tom Crawford. Later in the meeting, Crawford was appointed interim city administrator, effective April 28. Current administrator Roger Fraser is leaving the post to take a job as a deputy treasurer for the state of Michigan.

Although councilmembers did not comment on it, Fraser was attending his last meeting of the council as city administrator. And in his final major act, he gave a formal presentation to the council of his proposed fiscal year 2012 budget, as required by the city charter. The charter stipulates that the council will need to amend and approve the budget by May 16, its second meeting that month.

Parking Revenue

The longest deliberations of the night took place on the issue of how much revenue from the public parking system the city should take for use at its discretion. Those deliberations took place against the backdrop of the formal budget presentation by the city administrator for fiscal year 2012, which begins July 1, 2011.

Parking Revenue: Background – City-DDA Relations

In front of the council for consideration was a resolution giving instruction to its “mutually beneficial” committee, which is currently renegotiating a new contract under which the Ann Arbor Downtown Development Authority would continue to operate the city’s public parking system.

The city’s negotiating team – councilmembers Carsten Hohnke (Ward 5), Christopher Taylor (Ward 3) and Margie Teall (Ward 4) – had previously insisted that in the first two years of a 10-year contract, 16% of gross revenues to the public parking system would be allocated for use by the city at its discretion, with that amount rising to 17.5% of gross revenues in remaining years.

The DDA’s position had been consistent with the city’s previous request for the first two years of the contract, which would have the city withdraw 16% of gross revenues from the public parking system in each of those years. But the DDA’s current position is that for remaining years of the contract, the city’s share of gross parking revenues should remain at 16% instead of rising to 17.5%.

After the meeting, Christopher Taylor (Ward 3) gives an interview to Andrew Cluley, a reporter with WEMU, about the outcome of the mutually beneficial resolution of instruction.

The decision to bring a resolution of instruction to the council had come at a meeting between the respective mutually beneficial committees of the city council and the DDA on Monday morning, April 11. The resolution was meant to get a reading of the council’s support for either the DDA’s  position or the city committee’s position. [For detailed previous coverage: "City, DDA Continue to Talk Parking, Taxes"]

The existing contract under which the DDA manages the parking system is not based on a percentage of gross transfer. Instead, it’s composed of a transfer to the city’s street repair fund and “meter rent” of $1 million per year. Renewed in 2005 for a 10-year term, the contract allows for the city to transfer up to $2 million in a given year, provided the total amount transferred as “meter rent” does not exceed $10 million for the term of the contract. In each of the first five years of the contract, the city elected to transfer $2 million. Last year, the DDA transferred another $2 million as meter rent to the city, though it was not required under the current contract. [Chronicle coverage: "DDA OKs $2 Million Over Strong Dissent"]

Parking Revenue: Background – City FY 2012 Budget

Fraser’s formal budget presentation – which he previewed at a city council work session on April 11 and at a town hall meeting on April 13 – does not appear to depart in significant ways from the department-by-department budget impacts that department managers have presented to the council at a series of work sessions since the beginning of the year.

Highlights for 2012 include the layoff of five police officers, three other non-officer positions in the police department, and five firefighters. In other, non-safety services departments, Fraser is proposing – through retirements or already vacant positions or layoffs – to eliminate two positions in forestry, a partial position in facilities, one position in trash collection, a fleet mechanic, a management assistant, a Teamster supervisor, an accountant, two IT positions, and a court clerical position.

With additional reductions in FY 2013, the total employee count for the city would decrease to 688 down from a high of 1,005 in 2001 and from 848 in 1987.

Fraser’s proposed FY 2012 budget also includes a reduction of $116,000 in support for human services nonprofits. Other significant savings – roughly $475,000 – are realized through allocation of some forestry operations to the storm water fund. The FY 2012 also assumes that the street repair millage will be renewed by voters in the fall of 2011, and that the millage will subsume the city’s sidewalk repair program, freeing the Metro Act fund to absorb roughly $212,000 in general fund expenses like snow/ice removal and traffic island maintenance/mowing.

Parking Revenue: Background – “Shortfall” in FY 2012 Budget

At the city council work session on April 11, Fraser had responded to scripted questions from Hohnke and Taylor about the impact on the city’s ability to provide services, assuming the flat-16% scenario as compared to the 16-16-17.5% scenario. They were giving Fraser a chance to respond to the observation that had been raised during discussions by DDA board members: If there’s a perceived “shortfall” in the amount of parking revenues withdrawn from the parking system compared to previous years, then that “shortfall” amount is the same in the first two years of the contract, under either the city’s or the DDA’s scenario. That is, on their face, the two different scenarios would not appear to require different budget decisions this year or next (FY 12 and FY 13) – the two years for which the city is currently planning its budget. [Although the city adopts budgets one year at a time, it plans in two-year cycles.]

But Fraser contended at the April 11 work session that the two scenarios would require different choices this year. He explained that under the city’s 16-16-17.5% scenario, in the third year, the city’s public parking revenues would essentially be restored to their previous baseline revenue levels ($10,000 more, actually) – a baseline established over the course of the last six years at a bit less than $3 million total (when the “meter rent” of $2 million, a transfer to the city’s street fund, and two additional parking lots are all factored in). And starting in the fourth year of the contract, the extra revenue would start to compensate for the “shortfall” experienced in the first two years, erasing the cumulative effect of that shortfall between the sixth and seventh years of the contract, generating a total cumulative excess against the baseline of $1.15 million after the ninth year of the contract.

In contrast, the flat-16% scenario would leave a “shortfall” against the city’s baseline until sometime between year six and seven of the contract, at which point the city would start to recover some of the shortfall in previous years, but still with a cumulative deficit of $1.07 million against the baseline over the first nine years of the contract.

That amounts to the difference between a short-term issue and a structural deficit, said Fraser. So on the city’s 16-16-17.5% scenario it would be appropriate to make up the “shortfall” from the undesignated fund reserve. But on the flat-16% scenario, he said he would recommend taking action to deal with the structural issue in the first year it appeared – by eliminating four police or firefighters in FY 2012 to cover the roughly $400,000 “shortfall,” and two police or firefighters in FY 2013.

Parking Revenue: Background – What Is a Shortfall?

It’s worth noting that the city considers its baseline parking revenue (against which it measures a “shortfall” of revenues from the public parking system) to include all transfers made in the last year. Those transfers include two kinds of transfer that date back at least to 2005 – “meter rent” of up to $2 million per year, and a transfer to the city’s street repair fund, which has an escalator, but stands currently around $840,000. The rationale for the street fund transfer is that the city maintains the streets where on-street metered parking is located. The streets are analogous to a linear, roof-less parking structure/lot, so the logic is that the city should receive at least some portion of the meter revenues to maintain the “parking structure.”

Before the meeting, Joan Lowenstein (left), who is current chair of the Ann Arbor Downtown Development Authority board, chats with councilmembers Margie Teall (Ward 4) and Stephen Rapundalo (Ward 2).

During the April 19 council deliberations, Sabra Briere (Ward 1) said that when she heard that the city would be “held harmless” financially in the renegotiation of the new contract, she assumed that the baseline would include the $1 million annual meter rent figure in the old contract, not the maximum $2 million per year allowable. However, Carsten Hohnke (Ward 5) indicated to Briere that there had been a consensus by both the city and the DDA that it was the $2 million figure for meter rent that was the basis of the “hold harmless” assumption.

Another part of the baseline used by the city, but not necessarily by the DDA, is more recent in its history – revenues from the 415 W. Washington Lot and the Fifth & William Lot. In 2009, revenues from those two lots began to be transferred to the city outside the context of the city-DDA contract, and it’s not clear whether it was really considered as part of the “hold harmless” principle in the term sheet that guided the two “mutually beneficial” discussions. [Chronicle coverage for a timeline on those two lots: "City-DDA Parking Deal Possible"]

Revenues from those lots were part of an agreement between the city and the DDA to forestall the installation of parking meters in residential areas near the downtown, which the DDA opposed for a variety of reasons, among them a skepticism they would actually generate the levels of revenue the city was hoping for. [Chronicle coverage: "City to DDA on Meters: We're Skeptical"]

Although she did not try to argue the point at great length during the April 19 deliberations, Sandi Smith (Ward 1), who has also served on the DDA board since 2004, noted that if the $170,000 combined annual revenues from those two lots were left out of the calculation, the city would be held harmless over the life of a 10-year contract. In any case, the expectation was that those revenues were temporary, she said, with the idea that both parcels had a future that was different from a parking lot.

But based on the sentiments eventually expressed around the city council table on April 19, whether revenues from those two lots were part of the “hold harmless” calculation was of little interest to the council. Councilmembers were interested in the percentage of gross that would correspond to the total amount of parking revenue transferred last year – they wanted at least that amount this year, too. And when Marcia Higgins (Ward 4) heard the city’s CFO, Tom Crawford, say that the hold harmless amount would be roughly 19%, she proposed that number for all 10 years of the contract.

Parking Revenue: Council Deliberations – Intro

Higgins’ amendment to the resolution of instruction to the city’s mutual beneficial committee came after lengthy introductory remarks from Christopher Taylor (Ward 3). He set the context of the conversation about the resolution of instruction on the financial side of the contract by describing the progress made in other areas of the contract, contrasting the “narrative” part from the “numerical” part.

As part of that context, he also pointed to the resolution that the council had passed at its previous meeting, which tasked the DDA to lead a process to explore alternate uses for four city-owned downtown surface parking lots. [Chronicle coverage: "Ann Arbor Council Focuses on Downtown"]

Some key non-numerical areas of the contract include:

• Parking rates/hours to be set by DDA. The city council would not have a veto. [Currently the city council holds a veto on rate changes.] The contract stipulates that rates won’t be changed permanently without first: (1) announcing and providing written communication regarding details of the increase at a DDA board meeting; (2) at a subsequent board meeting, providing all members of the public a chance to speak before the DDA board on the matter – a public hearing; and (3) delaying any vote on the rate change until the board meeting following the public hearing.
• DDA to assist with directing parking enforcement. The contract calls for a Standing Committee to be formed that will meet for regular consultation about parking enforcement. The committee will consist of the executive director of the DDA, the parking manager, deputy police chief, community standards supervisor, and the city’s public services area administrator. This addresses the concern expressed by the DDA that while it already had the authority to set hours of enforcement (for example, for later in the evening), it could not actually schedule community standards officers to do the enforcement. [Currently, many downtown parkers pay for meters past 6 p.m. even though the meters aren't currently enforced that late.]
• City to report information to the DDA. The contract would call for the city to provide regular reports on its enforcement activity – data like how many citations have been issued and in which zones. The contract would also call for the city to provide reports to the DDA on its street maintenance activity in the downtown.
• Parking area defined. The contract provides a map designating exactly which areas the DDA has authority to decide placement of parking meters. Not included in the DDA parking area are any of the residential parking permit areas – a program over which the city will maintain its current control.

Later in deliberations, Sabra Briere (Ward 1) drew out for emphasis the fact that it was only the financial terms of the contract that the council was being asked to consider that evening, not the other aspects of the contract. Still, some of those non-financial terms drew criticism from Stephen Kunselman (Ward 3) during his comments, when he indicated that he would not support giving rate-setting authority to the DDA or allowing the DDA to decide to enforce meters in the evening. He also objected to defining a geographic area where the DDA would determine parking policy.

But Taylor began by portraying the DDA as a generous and cooperative party to the discussions on the contract. He said it was not a “commercial negotiation” – if it were, then the city would have been told to “pound sand” long ago, he said. However, the DDA had not behaved that way, said Taylor. He highlighted the fact that last year, the DDA had decided to make a $2 million transfer to the city that it was not required to make under the existing contract. It was a clear example of the DDA’s good faith, he said.

Parking Revenue: Council Deliberations – Interrogatories on Police

Taylor then called the city’s chief financial officer Tom Crawford to the podium, and the two then performed a dialogue that was virtually identical to the one that he and Hohnke had played out with city administrator Roger Fraser a week earlier at the council’s working session. To re-establish the city’s position that its 16-16-17.5% scenario was tenable without service cuts, but that the DDA’s flat-16% would require service cuts, Taylor and Crawford offered the following kind of back-and-forth:

Taylor: So under Ann Arbor’s [the city's] proposal, the revenue shortfall in the first two years is a “one time” occurrence, then it is reasonably anticipated that it would occur and there are no service cuts associated. Under the DDA proposal of a flat 16%, the administrator at our last work session stated that there would be permanent service cuts associated with that. Is that correct?
Crawford: Yes, that would be the recommendation. Because under a 16% flat scenario, even on the 16-16-17.5, in the out years it is a long time before that deficit is actually made up, and that is beyond, it’s assumption upon assumption to actually get that far. So to have a responsible balanced budget, I think you’ve gone too far. You really need to make the cuts if you’re going to be that low and don’t anticipate it being recovered in the near future.
Taylor: Okay, so under the, for colleagues, so under the flat 16[%] that would result in service cuts and the administrator stated his view that it was approximately four [public safety officers] in the first year, because of the $490,000 drop, and then at least two, he said two, I added the “at least,” thereafter going forward?
Crawford: Two to three.

Parking Revenue: Council Deliberations – Fund Balance (Bonds)

The DDA’s board had generally stated, Taylor reported, that its reluctance to adopt the city’s position in the negotiations over the financial terms of the contract was related to their concern about the undesignated fund balance of the DDA. So he then posed a series of questions to Crawford apparently intended to establish: (1) the DDA’s undesignated fund balance is not as important relative to the city’s fund balance; and (2) the reserve fund balances for the DDA on the city’s proposal of 16-16-17.5 would be reasonable, even in the lowest year in the 10-year projections.

Taylor: Okay. The DDA has articulated, the DDA’s description of their lack of comfort with this proposal is based upon what it does to its fund balance. We have stated in the course of our conversations that the city serves as a guarantor of the DDA. And although it’s useful and important for the DDA to maintain some fund balance, that the city serves as its guarantor, so that diminishes the risk of harm to the DDA in the event of a lower fund balance. Is that accurate?
Crawford: That is accurate. In fact the city owns the parking system. And where there has been debt issued on the parking system, the city has issued the debt. And so while the fees from the operation of the decks are the primary source of retiring the debt, the bonds that were issued are capital improvement bonds most recently, and those are in fact guaranteed by the city.
Taylor: Does the DDA fund balance play any role in the determination of Ann Arbor’s bond rating?
Crawford: Not really. The city itself, the DDA is small enough that it really doesn’t, it’s not a material factor, I wouldn’t say.
Taylor: Does the, is the city’s fund balance a material consideration in its bond rating?
Crawford: Yeah. There are many factors. But particularly the general fund balance is something they definitely look at.
Taylor: So if, and this is just for the purposes of fund bal- bond rating, well, why is a bond rating something important to consider?
Crawford: The bond rating, the largest impact of the bond rating financially to the city is in borrowing costs. Your borrowing costs will go up if your bond rating goes down.
Taylor: So if I understand it correctly, then, if we were to privilege the DDA’s fund balance over the city’s fund balance, you know, hold the DDA’s fund balance harmless, or preferred in deference to or over the city’s fund balance, that that at some point, we are not the rating agency, so we don’t know, but at some point that could reasonably be expected to have a negative impact on Ann Arbor’s fund balance [sic]? [Note: Taylor likely meant "bond rating."]
Crawford: Yeah, so to the extent that there is a priority that needs to be given to where fund balance is held, in my view, the city is where the fund balance would need to be maintained. The general fund is a fund that has the ability to transfer monies when it has them available to other funds. It’s not always the case that that can happen in reverse. So it is important to the city have, be healthy.

A few minutes later, mayor John Hieftje and Crawford reprised the same scene about how bond rating agencies evaluate the city:

Hieftje: The other point I wanted to go to, when the bond agencies take a look at who’s qualified and at what interest rate, is their view at the fund balance of the Downtown Development Authority or is their look at the fund balance of the city?
Crawford: The city. They’re evaluating the city.

Parking Revenue: Council Deliberations – Fund Balance (%)

As for the DDA’s fund balance under the city’s desired scenario, Taylor and Crawford seemed interested either in portraying the DDA’s reserves as: (1) adequate on the city’s desired scenario; or else (2) somewhat excessive on the DDA’s desired scenario.

It’s not clear which of those rhetorical points was intended, because Taylor asked for Crawford’s comment on the projected low point of 10.9% fund balance reserve under the DDA’s proposed flat-16% scenario – and the answer seemed to be that what the DDA was proposing wasn’t unreasonable. [When a fund balance is expressed as a percentage, it refers to the balance as a percentage of annual expenses.]

Taylor: … this gets us down from the DDA’s view in the critical year of [FY]15-16 to 10.9%. Is 10.9% a pretty health fund balance, do you think generally for the DDA in these economic times?
Crawford: Fund balance is a gray area, obviously something that people talk about. It’s important, you know each fund has its own characteristics of risk. And so it’s hard to say this is a healthy number or this is not a healthy number. But in my opinion, 10.9 for the risk profile is not unreasonable for that fund. And I say that because when you look at the city’s fund balance policy, which is a range from 8-12[%] and you look at the characteristics of the risk that we have, tax revenues, and then all the fee revenues, state shared revenues, we’re actually in an environment where almost everything is going down. It’s unusual, but it is occurring. In the DDA’s situation, you’re looking at the parking system. The parking system has appeared to be, history would tell us, it’s a fairly stable, more stable revenue source. So certainly expect it to be in that 8-12 range and maybe a little lower.

From later in the exchange between Taylor and Crawford, it appears that 10.9% – from the DDA’s preferred, flat-16% scenario – is still the one they were focused on:

Taylor: Would you have any concerns about the DDA’s fund balance in that critical dip year in the event that we moved to a 16-16-17.5 version?
Crawford: I would want to talk to the DDA more about it. If their plan is 10.9[%] and they’re going to be better than that, then I would not have an issue with that, because as you indicated, it’s my opinion that the TIF [tax increment finance] revenue is conservative in its projection. So no, I don’t have a problem with the 10.9 as it’s projected.

Later in the deliberations, Sandi Smith (Ward 1) focused the conversation on the figure associated with the projected low point for the DDA’s fund balance percentage under the city’s desired contract – the 16-16-17.5 scenario. That number is 7.4%, not the 10.9% that Taylor and Crawford had discussed earlier. She asked Crawford if he really was comfortable with that number. He confirmed that he was, although he allowed that he’d like it to be more – but that the city’s fund balance takes precedence over the DDA’s fund balance.

Smith also asked Crawford to reconcile his statements made around the time the city council was authorizing bonds for the DDA to build the South Fifth Avenue underground parking garage (now under construction) – statements to the effect that a fund balance of 12-15% or perhaps 15-18% would be appropriate. She asked him point blank what the difference was between then and now: What has changed?

Crawford began by saying that he didn’t recall giving the DDA a minimum fund balance that they needed to have. He described it as natural for an organization to save up fund balance reserves for a capital expenditure, then to spend down those reserves for a capital project and possibly dip into the fund balance to a point where it’s not comfortable. He said he didn’t see his comments in 2009 as inconsistent with what he is saying now.

The Chronicle reported Crawford’s comments at the Feb. 17, 2009 city council meeting:

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

A followup email dated March 7, 2009 from then-councilmember Leigh Greden to DDA board members shed additional light on the minimum reserve figure:

I understand there has been some discussion at the DDA that the City does not have a minimum reserve policy similar to the one Tom Crawford has been recommending for the DDA. In fact, the City DOES have a minimum reserve policy, and has had such a policy — in writing – for years. The policy has been printed in the City’s Budget for years, and reads as follows: The City shall “maintain an undesignated General Fund balance with a minimum range of 8% to 12%; provided that when necessary use of these funds occurs, subsequent budgets will be planned for additions to fund balance to maintain this standard over a rolling five-year average.” Tom Crawford has repeatedly urged the City to exceed this policy by maintaining an undesignated General Fund reserve of 15%. Consistent with Tom’s recommendations, the City has exceeded our policy by maintaining an undesignated General Fund reserve of 15-20%.

The on-demand online video archive of CTN recordings no longer includes the Feb. 17, 2009 city council meeting – it existed previously here: [link to Feb. 17, 2009 meeting archive]. According to CTN, some meetings were deleted because of storage-space issues. The Chronicle requested to view a copy of the DVD of the meeting, but according to CTN, as of April 22, staff had not been able to locate the DVD of that meeting – it’s missing from the binder where it was stored. CTN staff continue their efforts to locate it.

Parking Revenue: Council Deliberations – Fund Balance (TIF)

The conversation about the DDA’s fund balance included a focus on the issue of anticipated TIF revenues to the DDA. The TIF (tax increment finance) district of the DDA, in broad strokes, works by capturing property taxes that would otherwise be collected by entities like the city of Ann Arbor, Washtenaw County, the Ann Arbor Transportation Authority, the Ann Arbor District Library, and Washtenaw Community College. The DDA’s capture is only from the value of improvements to properties (hence, the word “increment”) and does not apply to future appreciation on the increased value.

In its 10-year planning, the DDA has typically projected 2% growth in its TIF revenues. It’s also typically added TIF revenues to its 10-year projections only when the taxes are on the books. The Zaragon II and 601 S. Forest projects – primarily residential developments – are under construction in the DDA district:

Taylor: Do the TIF figures for the DDA’s 10-year plan include any monies associated with 601 S. Forest or Zaragon II?
Crawford: Not that I can tell.
Taylor: Do you have any notion as to, well, do you have any notion as to what those properties would gain the DDA in terms of TIF revenue?

Crawford’s recollection given to Taylor was in the ballpark of the exact numbers provided subsequently to The Chronicle by the city treasurer’s office: Zaragon II and 601 S. Forest projects are expected annually to generate $206,391 and $286,645, respectively.

The DDA has also not included TIF revenues in its 10-year projections that the city reports have already been filed with the state of Michigan for FY 2011. Specifically, the DDA’s 10-year plan indicates TIF revenue of $3,796,929 for FY 2011, but according to the city treasurer’s office, $3,908,576 is actually on the books for this year.

And looking ahead to future years, when construction on Zaragon II and 601 S. Forest is completed, that difference will be even greater. The city’s point, essentially, is that the DDA is under-representing in its 10-year plan what it could reasonably anticipate for TIF revenues. In response to Taylor’s prompt, Crawford responded:

Crawford: Off the top of my head, because I did not bring that with me, I believe, you know, I don’t know what year they pulled those, but we are seeing substantially more than that in [FY12]. … So the tax numbers have been close to finalized now, and we are in the neighborhood of $450,000 more, I would say, in this category.
Taylor: Would you believe it if I, well, I , I I, I didn’t remind you to bring this email, but for 411 [Lofts], we’re bringing in $408,000 in FY12, and for Zaragon I there was $271,000 brought in, is that about right? So that’s several hundred thousand dollars that are already in the bank for FY12 that are going to be going forward …

Mayor John Hieftje also stressed that TIF revenue has continued to climb – at double-digit pace in the last three years, while the city’s general fund tax revenue has shown decreases of 1-4% each year. Hieftje had stressed this point at a March 30 meeting of the DDA operations committee (known officially as the bricks and money committee).

Parking Revenue: Council Deliberations – Economic Development

Contrasted with comments y Taylor and Hieftje on increased TIF revenue, remarks by Sandi Smith (Ward 1) focused more on the parking fund within the DDA, as opposed to the overall fund balance of the DDA. The overall fund balance is shored up by TIF-capture revenues from a range of other taxing jurisdictions, not just the city of Ann Arbor’s. [Previous Chronicle coverage on that issue: "City, DDA Continue to Talk Parking, Taxes: It's about parking fund balances, not TIF revenues"]

Sandi Smith (Ward 1) arrives to the April 19 council meeting.

Smith was consistent at the April 19 meeting with a theme she’s highlighted in recent weeks on the use of the parking fund as an economic development tool. She pointed to the Village Green project planned for the First and Washington parcel, saying that if another opportunity like that came along, the DDA would not currently be in a position to take advantage of it. [The DDA has committed to paying back $9 million of bonds for the construction of a 244-space parking deck on the lower two stories of a 9-story, 156 unit residential development. According to Village Green, the purchase option is still on course to be completed this spring. That would result in a $3 million payment to the city of Ann Arbor, which will go into the construction fund for the new municipal center.]

Smith characterized the issue as a difference in philosophy: Is the parking system and its revenue stream an economic development tool, or is it a way to prop up the city’s general fund? She noted that it was particularly important to consider the city’s efforts in support of economic development, in light of the fact that the city’s economic development fund is being eliminated as part of the proposed FY 2012 budget. The remaining money in that fund – established originally in the amount of $2 million to provide monies as an incentive for Google to locate its offices in downtown Ann Arbor – was folded into the general fund reserve.

In responding to Smith’s talk of economic development, Stephen Kunselman (Ward 3) was not saying anything he has not said before: The city is not in the business of economic development – that is Ann Arbor SPARK‘s job, he said. He, as an elected official, is responsible for health, safety and welfare, not economic development, Kunselman said. He thinks of his role as providing good roads, clean water and good public safety.

Stephen Rapundalo (Ward 2) also challenged the notion that the DDA’s mission was economic development, citing the mission statement of the DDA, which refers to supporting public buildings. He remarked that if the mission of the DDA included economic development, then he’d like to see some kind of economic development plan, adding that he’d also like to see some kind of plan from Ann Arbor SPARK.

Smith responded to Rapundalo by pointing out that the second part of the DDA’s mission statement actually includes encouraging private investments:

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.

On the relationship of parking revenues to the city’s general fund, Mike Anglin (Ward 5) was willing to say it out loud: To fund the city’s request for additional parking revenue money, the council was basically asking the DDA to raise parking rates.

Along those lines, during the course of the mutually beneficial committee negotiations, an exasperated Roger Hewitt on the DDA board suggested at one point that the arrangement should simply be year-to-year, and should work on a two-step process each year: (1) The city tells the DDA how much money it would like to take out of the parking system; and (2) the DDA sets rates to generate that amount of revenue. Hewitt also raised the specter of signage on parking meters and parking structures indicating what percentage of a downtown public parking dollar goes to the city’s general fund as a “tax.”

The idea received little traction. At that committee meeting, the DDA’s executive director, Susan Pollay, cautioned that demand for parking was at least somewhat elastic. At some price point, people would begin to seek alternatives to paying for public parking or opt out of visiting downtown Ann Arbor.

During the April 19 council deliberations, Hewitt was invited to the podium to report on the level of parking demand. He told councilmembers that revenues continued to increase, but that the increased revenue over the last two years did not match the increase in parking rates. That could indicate a slight softening of demand.

Parking Revenue: Council Deliberations – Committee’s Role

The city’s mutually beneficial committee had essentially brought two choices on a percentage-of-gross figure to their council colleagues for consideration: (1) a 16-16-17.5% scenario; or (2) a flat-16% scenario. Early in deliberations, it became clear that there was considerable support for a third option, which was for the city’s negotiating committee to return to their DDA counterparts with an escalated offer. Marcia Higgins (Ward 4) began discussion on that figure at 19%.

Met with resistance from members of the city’s committee, Higgins noted at more than one point during deliberations that the purpose of the resolution was for the council to give the committee direction. The committee had come to ask the council for direction, she observed, but the committee responded by saying it was uncomfortable going back with the higher request – she asked if they would really negotiate based on the council’s direction.

Left to right: Ann Arbor Downtown Development Authority board members John Splitt and Roger Hewitt, and the city’s CFO, Tom Crawford.

Higgins’ remarks along these lines were consistent with the theme she’d highlighted at the council’s previous meeting, when it had authorized the DDA to lead a process to explore alternate uses of city-owned downtown surface parking lots. On that occasion, the city’s negotiating committee had resisted other councilmembers’ desire to limit the scope of the DDA’s work to just four of the downtown city-owned properties. Higgins had said the last time she checked, a city council meeting was an opportunity for councilmembers to give their opinions, which was what she was doing.

At the April 19 council meeting, Carsten Hohnke – a member of the committee – responded to Higgins by saying he would debate the percentage figure at that meeting, but once the number was decided, he would negotiate that number.

Taylor’s take on the issue was that he would accept the council’s direction on the matter, but that did not mean he felt it was calculated for wisdom or success.

On the issue of the relationship of the council to its negotiating committee, Sabra Briere (Ward 1) noted that the DDA’s committee had consulted with the entire DDA board multiple times to get explicit direction, but this was the first time the city council had been asked for direction. She said she was sorry that this left the committee with little time to resolve the issue.

By way of logistical background, the respective committees of the city and the DDA are scheduled to meet again on April 25. The full DDA board will meet at noon on May 2 and the council will meet the same day at 7 p.m. The time is the usual one for the council, but the DDA’s meeting was shifted from the following Wednesday, to allow more board members to attend.

The May 2 DDA board meeting will be the last opportunity for the DDA board to alter its already-approved budget, before the city council must approve the city’s budget – at the second meeting of the month, on May 16. The DDA’s approved budget at this point includes a transfer of parking revenues to the city of around $1 million, covering the street repair fund money, and money from two specific parking lots – at 415 W. Washington and Fifth & William.

When the city votes on May 16, it will be giving final approval to the DDA’s budget, which is part of the city’s budget.

Parking Revenue: Council Deliberations – DDA as Arm of the City

The fact that the city council must ultimately approve the DDA’s budget was a point Stephen Kunselman (Ward 3) made during deliberations.

By way of historical background, that approval is not simply a formality – on at least one occasion previously, the council has reached an arm into the DDA’s already approved budget and changed an item on the same night it approved the city’s budget as a whole. From the May 21, 2007 city council minutes [Fund 0003 is the TIF fund]:

[FY 2008 budget] Amendment 11

Resolved, that the Downtown Development Authority fund (0003) expenditure budget be decreased by $1,600,000 to reduce the appropriated reserves for future capital construction projects.

On a voice vote, the Mayor [John Hieftje] declared the motion carried with one dissenting vote made by Councilmember [Joan] Lowenstein.

The possibility that the city council could change the DDA’s budget is affecting how the DDA is currently proceeding with its energy saving grant program. The budget approved by the DDA board includes $100,000 in FY 2012 for that program. But Dave Konkle – former energy manager for the city and now consulting for the DDA on its energy saving grant program – has stressed at recent meetings of the DDA’s partnerships committee that he cannot give assurances to potential grant recipients that the money will be there – until the city council approves the budget.

During deliberations at the April 19 council meeting, mayor John Hieftje reiterated his view, expressed often in various contexts, that the DDA is not an independent body, but rather an arm of the city. At a recent DDA board meeting – the mayor sits on that board – Hieftje compared the DDA to a child, whose parent must co-sign for a loan.

Christopher Taylor (Ward 3) looks on as his ward colleague Stephen Kunselman (Ward 3) weighs in against Taylor’s view that the city should accept a 16-16-17.5% arrangement for a new contract with the DDA.

Kunselman echoed that sentiment, saying that the DDA is like a teenager that needs some tough love. He asserted the primacy of the city council, as elected officials, over the members of the DDA board, which has members who are nominated for appointment by the mayor and confirmed by the council. Kunselman allowed that everyone needed to come together as a team, but he was careful to single out the city councilmembers as the “star players of the team.”

In his assessment of the situation, city administrator Roger Fraser said he was surprised that the council was even still considering “subsidizing” the DDA. The rest of the city’s departments had been skinnied down, he said, yet no one was asking the question of whether we should have “less DDA.”

At one point Taylor noted that the conversation around the table seemed to suggest an assumption that city council could act without the DDA’s assent, which prompted the mayor to interject his disagreement – a breach of parliamentary protocol that appeared to startle Taylor briefly:

Taylor: We are having this conversation as if it is entirely our choice …
Hieftje: … no we’re not!
Taylor: [4-second pause] I understand, uh, I, I, well, it is my perception that that is the nature of this conversation, and I would just recollect to my colleagues that that is not the case …

Parking Revenue: Council Deliberations – 19% Tactic

The opening gambit of a request for 19% of gross parking revenues was based on Crawford’s answer to the question of what the “hold harmless” percentage would be if it were applied to just FY 2012. Marcia Higgins (Ward 4) proposed that as an amendment to the resolution before the council.

She tipped the fact that it was a negotiating tactic, when mayor John Hieftje eventually invited her to reduce the number to 18% in order to achieve a greater consensus. Her reply was that she was “not yet” ready. Only just before the vote on her amendment did she change the figure to 18%, with agreement from Kunselman, who was the seconder on the amendment to 19%.

Other councilmembers, including members of the negotiating committee, expressed concern that 19% was over the top – too far in the other direction. Sabra Briere (Ward 1) noted, however, that if the city’s need is great this year, and if the DDA’s burden to the parking fund is somewhat less this year [because it's using some TIF dollars to shoulder the burden of down payment and bond payments on the underground parking garage], then perhaps the city should be asking for 20% in the initial year, with less in subsequent years.

Parking Revenue: Council Deliberations – 18% Vote

The vote on the amendment of the resolution of instruction to set the percentage-of-gross parking revenue figure at 18% was 8-3. Hohnke – a member of the negotiating committee that had argued for the 16-16-17.5% scenario – joined the majority as the last person to weigh in on the roll call vote.

Dissenting were the other two members of the committee, Teall and Taylor, and Smith, who serves on the DDA board.

Outcome on amendment: The council voted 8-3 to amend the resolution of instruction to negotiate based on an 18% figure across all 10 years of a 10-year contract.

The vote tally on the resolution as amended changed by one from the outcome on the amendment. Teall said that the consensus of the council was clear and that she would thus support the resolution.

Outcome: The council voted to direct the committee to ask the DDA for 18% of gross parking revenues in each year of a 10-year contract. The vote was 9-2, with dissent from Christopher Taylor (Ward 3) and Sandi Smith (Ward 1).

Medical Marijuana

In front of the council for consideration were votes on both the zoning and licensing ordinances that were being considered for their final votes.

The medical marijuana zoning ordinance received its initial approval by the council at its Oct. 18, 2010 meeting. The delay since the initial Oct. 18, 2010 zoning vote stems from the city of Ann Arbor’s strategy in legislating zoning and licensing of medical marijuana businesses – that strategy has been to bring both licensing and zoning before the city council at the same time for a final vote.

The context for development of zoning regulations was set at the council’s Aug. 5, 2010 meeting, when councilmembers voted to impose a moratorium on the use of property in the city for medical marijuana dispensaries or cultivation facilities. The council also directed the city’s planning commission to develop zoning regulations for medical marijuana businesses.

Subsequently, the city attorney’s office also began working on a licensing system. The council undertook several amendments to the licensing proposal at four of its meetings over the last three months: on Jan. 3, Feb. 7, March 7 and March 21. The council finally gave initial approval to the licensing proposal at its March 21 meeting. [.pdf of Michigan Medical Marijuana Act]

Medical Marijuana: Public Hearings

Two separate public hearings were held – one for the licensing and one of the zoning regulations. Many of the same people spoke at both, and many had spoken previously to the council. Here’s a sampling from both April 19 hearings:

Weighing in against the idea of ordinances that provide a locally legal way for people to gain access to medical marijuana was Thomas Partridge. He called on the council to freeze progress of the ordinances. He pointed to national and state news reports of illegal shipments of drugs and cautioned against the violence that is associated with illegal drugs. He said he was committed to not using illegal drugs. He said that marijuana use is intertwined with other addictive drug uses.

After the public hearing, Dennis Hayes (right) and Thomas Partridge (left) discuss their differing views on medical marijuana.

Countering Partridge was Tim Beck, of the Detroit Coalition for Compassionate Care, who said that in the two years the Michigan Marijuana Law has been in effect, Ann Arbor has not fallen into a wave of crime. On the issue of regulating caregivers, he encouraged the council to “let it ride.” He pointed out that in Grand Rapids, when a similar law was enacted, no one ever applied for a license.

Gersh Avery introduced himself as a resident of Dexter, and founder of the Cannabis Cancer Project – which aims to develop cancer-killing agents from essential oils extracted from the cannabis plant. He claimed some success already, and stressed that the goal is not merely symptom relief, but rather to kill cancer and cure other diseases. He pointed to Crohn’s disease as an example of a category of illnesses that may be responsive to treatment with essential oils. Countering Partridge’s point about addictive behavior, he said that a recent study showed that prescription drugs are five-times more likely to be a gateway drug than marijuana is.

Rhory Gould introduced himself as representing Arborside Health and Wellness. He said the proposed number of 15-20 licenses would not be enough to serve Ann Arbor. He suggested that adding 5-10 more would mean 5-10 more businesses and 30-60 more jobs. He criticized the idea of requiring dispensaries to maintain a permanent list of suppliers, saying it would do more harm than good. He also complained about the length of the proposed moratorium, noting that businesses that began operation before it was imposed and are grandfathered in are happy with it.

Along with several other demonstrators outside city hall before the meeting, Chuck Ream told the council that the regulation of cultivation facilities and the requirement of list-keeping included in the ordinances needs to be removed. He also criticized city attorney Stephen Postema for his handling of the medical marijuana issue.

Postema was also sharply criticized by Trena Moss, who described an encounter with Postema on Liberty Street when she was collecting petition signatures for the medical marijuana referendum. [Postema sometimes walks to work downtown along Liberty Street from his home in the Eberwhite neighborhood.] She asked him if he remembered the encounter, which he apparently did not. She told him that she remembered him well, and reported that he’d told her she was wasting his time – that he and his friends wouldn’t let it pass, even if they collected enough signatures to get the measure placed on the ballot. She asked him if perhaps he had something personal against medical marijuana patients, and that if he did, then he should perhaps step aside.

During council deliberations, Carsten Hohnke (Ward 5) said that Postema had accepted the guidance of the council in working on Ann Arbor’s medical marijuana ordinances.

Dennis Hayes addressed the 1,000-foot setbacks required in the zoning regulations by suggesting either 500 or 200 foot setbacks. He also encouraged the council to consider office districts as allowable locations for dispensaries under the zoning code.

Several speakers, including Matthew Abel, noted that the federal government is interested in getting information about caregivers and patients. Abel also noted that caregivers should be able to grow the amount of marijuana allowable under the state law without restrictions. The only real concern that the council should be addressing in legislation on growing, he said, was the possibility that people could buy houses for the sole purpose of setting them up as “grows.”

Medical Marijuana: Council Deliberations

The number of amendments that had been proposed by councilmembers and the city attorney’s office as late as the afternoon of April 19 led Sandi Smith (Ward 1) to start deliberations with the suggestion that the council delay the votes on both measures until May 2. Smith noted that councilmembers had received the most recent updates in proposed amendments at 3:38 p.m. and 6:29 p.m. that same day – the council meeting’s scheduled start was 7 p.m.

Sabra Briere (Ward 1) said that it was difficult to provide the public with the material that the council would be considering in advance of the meeting, because she’d been told by the city attorney’s office that it had to be vetted by the whole council before it could be shared publicly. Seated next to Briere, city attorney Stephen Postema told her that proposed changes suggested by councilmembers or by others could be shared with the public. She replied: “I was not told that.”

Subsequent back-and-forth among councilmembers, the mayor and the city attorney confirmed that if proposed amendments are passed on May 2, it would likely reset both ordinances to their first readings, which would require that they receive an additional second reading.

In discussing postponement, some councilmembers pointed to specific issues that they wanted to focus on in the postponed deliberations. Christopher Taylor (Ward 3) indicated he was not certain that the proposed legislation yet achieved the goal of providing a “safe harbor” for caregivers.

Carsten Hohnke (Ward 5) and Tony Derezinski (Ward 2) check over the April 19 agenda.

Taylor said that on further reflection, he felt that patients who are availing themselves of the opportunity to gain access to medical marijuana do so with the full knowledge that the product they’re getting has not been certified with the rigor that the federal Food and Drug Administration would apply. So he alerted his colleagues to the idea that he might be more inclined to support some kind of disclaimer

Carsten Hohnke (Ward 5) and mayor John Hieftje responded to the suggestion raised during public commentary that the city attorney or councilmembers had personal issues against marijuana. Hieftje said he would support legalization of marijuana, if a way could be found around the risks posed to young people. Hohnke said his background in neuroscience led him to conclude that the medical benefit of marijuana is well documented.

To prepare for future deliberations, Briere asked her colleagues to reflect on the appropriateness of licensing cultivation facilities. She pointed out that home occupation businesses are not required to be licensed under the proposed ordinances, but cultivation facilities are. The difference, she said, boils down to whether growing by a caregiver takes place in one’s own home or in some other location (making it a “cultivation facility”). She also pointed to a newly proposed amendment, which requires a zoning compliance permit, as potentially posing problems by creating records about caregivers, which the city might be forced to produce, even if the city were to fight a request to produce those records.

Following up on Briere’s remarks, Stephen Kunsleman (Ward 3) gave notice to his colleagues that he would not be supporting the text that refers to zoning compliance permits.

Outcome: The council voted unanimously to postpone deliberations on the zoning and licensing of medical marijuana businesses until May 2.

Interim Administrator

Added to the council’s agenda at the start of the meeting was a closed session to discuss applications that had been solicited internal to the city for the interim city administrator’s job. The section of Michigan’s Open Meetings Act allowing for a closed session under those circumstances reads:

15.268 Closed sessions; permissible purposes. Sec. 8. A public body may meet in a closed session only for the following purposes: …
(f) To review and consider the contents of an application for employment or appointment to a public office if the candidate requests that the application remain confidential. However, except as otherwise provided in this subdivision, all interviews by a public body for employment or appointment to a public office shall be held in an open meeting pursuant to this act.

After the closed session, two items were added to the agenda – one to establish a process for hiring the permanent administrator, and another to appoint an interim. The city’s current administrator, Roger Fraser, announced at the end of February that he would be resigning to take a job with the state of Michigan as a deputy treasurer.

Marcia Higgins (Ward 4) is chair of the search committee, which brought both recommendations to the council. Other members of that committee were: Sabra Briere (Ward 1), Tony Derezinski (Ward 2), Christopher Taylor (Ward 3) and mayor John Hieftje.

Higgins reviewed the search committee’s work over the last few weeks, which included a total of four meetings. The committee’s recommendation was to appoint Tom Crawford as interim city administrator. Crawford currently serves as the city’s chief financial officer.

The job for permanent city administrator will now be posted and advertised. Affion Public will be contracted to assist the city’s human resources department with the search – for a flat fee of $18,000 plus additional travel expenses expected to total less than $25,000. The targeted salary range for recruitment will be $145,000-$150,000.

Affion’s work will begin with a visit to Ann Arbor in the first week of May to meet with councilmembers, city employees, and members of the public to get a clearer idea of the intangible qualities that are desired in an applicant. An ideal timeline would include closing the application window after 30 days, using late May and June to winnow the field and interview candidates, with an offer to be made by July 1. On the ideal timeline, the new administrator would start work on Aug. 1.

Although the city’s public services area administrator Sue McCormick had been widely assumed to be a natural choice for interim, a condition on the interim appointment was that the person would not be a candidate for the permanent job. [Previous Chronicle coverage: "Ann Arbor Fills City Administrator Job"]

Outcome: The council voted unanimously to adopt the hiring process recommended by the search committee and to appoint Tom Crawford as interim city administrator, effective April 28, 2011.

Panhandling Ordinance

In front of the council for consideration was final approval to a revision to the city’s code on disorderly conduct – the part dealing with solicitation, which is more commonly known as panhandling. All ordinances must be approved on two separate votes before the council, the second of which must be preceded by a public hearing. The panhandling ordinance revision received its initial approval from the council at its April 4 meeting.

The revised ordinance prohibits panhandling in one generally-defined additional location (in or within 12 feet of a public alley) and one specific location (within 12 feet of the downtown location of the Ann Arbor District Library.) [.pdf of revisions to existing ordinance as they were drafted at the start of the April 19, 2011 meeting]

The proposal to revise the law grew out of a street outreach task force, which was appointed at the council’s Sept. 20, 2010 meeting and charged with developing cost-effective recommendations for addressing the issue of downtown panhandling and the needs of those who panhandle. [Previous Chronicle coverage: "Ann Arbor Task Force Consults Panhandlers"]

At the council’s March 21, 2011 meeting, the council received a report from two members of the task force – Maggie Ladd, executive director of the South University Area Association, and Charles Coleman, a project coordinator with Dawn Farm. A recommendation contained in the report included revising the city’s ordinance on solicitation to prohibit panhandling in additional locations. [.pdf of street outreach task force report]

Panhandling: Public Hearing

Four people spoke during the public hearing on the ordinance. Thomas Partridge said it was a very curious time to be considering the ordinance – a time when the city, county and state all have budget concerns. He characterized the change in the law as a measure that would “clamp down” on the most vulnerable members of society. He called for postponing the vote, until the sociological and psychological ramifications could be studied on an academic basis. Partridge noted that politicians also ask for handouts when they ask for contributions to their political campaigns.

Bob Dascola introduced himself as the owner of a two-generation family business since 1939 and a board member of the State Street Area Association. He told the council that he had been a member of the last task force that had addressed the issue of downtown panhandling, in 2001-2003. He told the council that they’d identified three kinds of panhandlers: (1) substance abusers; (2) the mentally ill; and (3) opportunists. He said that most of the panhandlers in the area of his barbershop are opportunists. He described the previous ordinance revision as raising the bar for acceptable behavior in the community, and urged support for the current ordinance revision and the other recommendations of the task force.

Bob Dascola (left) and Peter Ludt (right) seated in the audience before the start of the April 19 council meeting.

Ray Detter introduced himself as the head of the downtown citizens advisory council, saying that he’d participated in the previous effort in 2001-2003. He noted that last summer there had been a noticeably worsening situation. He said that a member of the DCAC had walked from her home on East Liberty to the White Market on William, and had been accosted four times by panhandlers. They’d taken up the issue with chief of police Barnett Jones, deputy chief John Seto and Ward 1 representative Sabra Briere. Of the new task force that had been formed out of those communications, Detter joked, “I was on it, but I still say it did an excellent job.”

Detter stressed that no one needs to panhandle due to hunger, given the various resources in the community. He said that almost universally, panhandlers are not homeless. He noted that the recommendation of the task force was to emphasize education of people who might be inclined to give money to panhandlers – the marketing slogan is “Have a heart, give smart.”

Peter Ludt introduced himself as a board member of the State Street Area Association and a member of the street outreach task force. He said he was a manager of a coffee shop on the 300 block of State Street and had resorted to calling the police department about panhandlers on more than one occasion. He affirmed the First Amendment rights of people to panhandle, but also noted that some people feel uncomfortable when they’re solicited. He recognized that with the city’s budget cuts, the beat cops would not be brought back. Most people, he said, don’t know if the activity they are witnessing is illegal. The number one message, he said, is education.

Panhandling: Council Deliberations

Because Sabra Briere (Ward 1), who chaired the task force, had briefly left the table when the council came to the agenda item, mayor John Hieftje filled the time by noting that he was around when the previous task force had been appointed. He told the council that professionals say that giving panhandlers money is not the correct thing to do. He noted that almost all panhandlers are not homeless and that free meals are available three times a day in Ann Arbor. He said that previously the downtown merchants had tried collection boxes placed at cash registers to provide an alternative way for people to give cash.

Andrew LaBarre, new vice president for government affairs for the Ann Arbor/Ypsilanti Chamber of Commerce, before the meeting. A former staffer for Congressman John Dingell, he apologized when he introduced himself to the council for not wearing a jacket. He had locked it inside his new office and was without a key.

Hieftje said that the city respected the right of people to solicit, and he complimented the task force’s work

When she returned, Briere stressed that the ordinance change is just one of three “legs in the stool,” the others being education and community commitment.

Tony Derezinski (Ward 2) said he’d received a lot of communications from constituents about the ordinance, including a long message from a law school student and comments from merchants at a meeting of the Main Street Area Association. He said it would be important to evaluate how well the ordinance is serving its intended purpose.

That same evening, Andrew LaBarre introduced himself to the council as the new vice president of government affairs for the Ann Arbor/Ypsilanti Regional Chamber of Commerce. The chamber is related to the panhandling ordinance inasmuch as the mayor’s downtown marketing task force was tapped by the panhandling task force as leading the educational component of its recommendations. At recent meetings of the council and the DDA board, Hieftje has pointed to the vacancy at the chamber, left by Kyle Mazurek, as the reason that his marketing task force has been on hiatus.

Outcome: The council voted unanimously to give final approval to the ordinance revision.

Former Bessenberg Bindery Site Plan

In front of the council for consideration was a site plan for 215 N. Fifth Ave. – formerly the site of the Bessenberg Bindery, which has moved to the Thomson-Shore Inc. facility in Dexter. The Fifth Avenue property is now owned by Jon and Lisa Rye. Jon Rye, a University of Michigan alumnus, is president and chairman of Greenfield Partners and Greenfield Commercial Credit, both located in Bloomfield Hills.

The plan calls for tearing down the one-story building and constructing a two-story, single-family, owner-occupied house with an attached two-car garage. The entrance will be oriented to the north, and the garage will be accessed from the public alley on the west side of the site. The site is directly north of the Armory condos and south of a two-story residential rental property.

The project requires a site plan because the single-family house is on property that’s not zoned solely for residential purposes. It’s zoned D2 (downtown interface) and is located in the Old Fourth Ward Historic District. The Ann Arbor historic district commission already reviewed the site plan and issued a certificate of appropriateness at its Feb. 10, 2011 meeting. The Ann Arbor city planning commission had given its recommendation for approval of the site plan at its March 15, 2011 meeting.

During the public hearing at the city council meeting, only one person spoke – the architect on the project, Dick Mitchell, of the Ann Arbor firm Mitchell and Mouat. He stressed that the planned design met the requirements of the zoning ordinance with respect to setbacks and height, and had been approved by the city’s historic district commission. The design was also supported by the downtown citizens advisory council, he said. He indicated that he was available for any questions.

Later in the meeting, when the council’s vote was taken, there were no questions or deliberations by the council. Mayor John Hieftje thanked Mitchell for sitting through the meeting, which had included lengthy deliberations on the contract under which the Ann Arbor Downtown Development Authority manages the city’s parking contract.

Outcome: The council voted unanimously to approve the site plan for 215 N. Fifth Ave.

Near North PUD

The council was asked to consider an authorization for revisions to the elevations of the Near North planned unit development (PUD) affordable housing project on North Main Street. The city council originally approved rezoning for the project – a four-story, 39-unit mixed use residential building on a 1.19-acre site – on Sept. 21, 2009.

The changes include modifying the locations where exterior materials – glazing, panelized exterior cladding materials, plus accent materials – will be used. Roof lines have also been proposed, but the building is still under the maximum height permitted. The changes, which were prompted by alterations to the interior layout of the building, were presented to the surrounding neighbors at a meeting on March 17, 2011.

Developer Bill Godfrey of Three Oaks was present at the meeting, but was not asked to the podium to answer any questions from the council.

Outcome: The council voted unanimously to approve the changes to the Near North PUD.

Loan Forgiveness

In front of the council for consideration was approval of a policy that grants to the city administrator the authority to forgive certain loans made by the city on affordable housing units that have affordable housing covenants. The city administrator would need to determine that loan forgiveness is necessary to protect the long-term affordability of the housing, and that loan forgiveness would facilitate the transfer of ownership to other income-qualified purchasers.

The request to have such a policy came from the office of community development. It arose from two recent foreclosures on properties in Stone School Townhomes, one of three housing developments where the city currently has affordable housing covenants. The other two are Ashley Mews and Northside Glen.

When a property is foreclosed, the affordable housing covenant automatically terminates.

Outcome: The council voted unanimously without comment to approve the loan forgiveness policy.

City Energy, Emissions Goals

On the agenda was a resolution setting a goal of reducing greenhouse gas emissions in Ann Arbor’s municipal operations by 50%. The baseline standard for the percentage reduction would be emission levels in 2000, which measured 46,435 tons of carbon dioxide equivalent (CDE). The city’s goal is to achieve the 50% reduction target by 2015. The city’s most recent figures, from 2010, put CDE emissions for municipal operations at 34,445 tons, which is roughly a 26% reduction from 2000 levels.

As part of the same resolution, the council also set a goal of reducing greenhouse gas emissions by 8% throughout the community for the same time period. In 2000, the city estimates the entire city produced 2,087,463 tons of CDE, which has improved little in the most recent year for which figures are available, 2009: 2,054,221 tons.

The resolution also updated goals on renewable energy use. The city had previously had a goal of 20% renewable energy for municipal operations by 2010, which was subsequently increased to 30%. The 20% target was met – when the figure was rounded upward only slightly. The resolution approved on April 19, 2011 reset the goal of 30% renewable energy in municipal operations and 5% community-wide by 2015.

The resolution also directs city staff to consider options to purchase long-term, fixed-rate renewable electricity from Michigan wind turbines.

Outcome: The council voted unanimously without comment to approve the reset goals.

Police Car Purchase

In front of the council for consideration was approval of the purchase of two police cars totaling $54,625 – a Chevy Caprice for $25,604 and a Chevy Tahoe for $29,021 from Shaheen Chevrolet. At the council’s Feb. 22, 2011 meeting, it had authorized the purchase of five police cars – Crown Victoria Police Interceptors – for $20,730 each, a total of $103,650.

But at that meeting, city administrator Roger Fraser had indicated that the city might opt not to purchase all five. From The Chronicle’s report of that meeting: “The city might decide not to buy all five Crown Victorias, and instead purchase a new model that Chevrolet is making available in late summer or early fall, Fraser said.”

The two purchases authorized on April 19 will replace cars under the police union’s contract that stipulates cars cannot exceed 80,000 miles or a six-year life. Adding the Caprice to the Dodge Charger that the department purchased previously will allow the Ann Arbor Police Department to assess how it wants to stock its fleet in the future, given that the Crown Victoria is going out of production. A third option besides the Caprice and the Charger would be whatever model Ford uses to replace the Crown Victoria.

The Chevys that were authorized by the Ann Arbor city council would be purchased under the cooperative bidding programs of the State of Michigan, Oakland County, and Macomb County. Shaheen Chevrolet in Lansing was the lowest bidder under the State of Michigan’s program.

Outcome: The council voted without comment to approve the purchases of the Chevy police cars.

Communications and Comment

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

Comm/Comm: Parkinson’s Disease Awareness

Kathleen Russell and others were on hand to receive a mayoral proclamation designating April as Parkinson’s Awareness Month.

Comm/Comm: Volunteer of the Month

John Dentler was honored as volunteer of the month for his service to the Ann Arbor police department.

Comm/Comm: Historical Perspective

In her communications time, Sabra Briere (Ward 1) noted that April 19 is the second night of Passover, which is about liberation through sacrifice. She also noted that on the same day 236 years ago, the first shot in the Revolutionary War was fired at Lexington and Concord. She noted that on that evening the council was engaged in politics. She mused that John and Sam Adams would be surprised, perhaps, at the topics they would be discussing. She figured that Abigail Adams would be pleased that there were women at the table [Briere, Sandy Smith, Margie Teall and Marcia Higgins]. She allowed, however, that they have a long way yet to go.

Comm/Comm: Library Lot

Mike Anglin (Ward 5) noted that the Library Lot request for proposals (RFP) had been put aside, but that the community continues to discuss the issue. He wondered who the stakeholders will be. He noted that some city councilmembers had attended a recent meeting of the city’s Democratic Party club where the issue of the Library Lot had been discussed.

Comm/Comm: What Would Christ Say?

As the only speaker who signed up for public commentary reserved time at the start of the meeting, Thomas Partridge introduced himself as a Washtenaw County and Ann Arbor city Democratic Party member. He called the council’s attention to the fact that April is a particularly prayerful month – the month of Palm Sunday, Good Friday and Easter. He posed the same question that he has during recent weeks at public commentary at a range of different public meetings: What would Christ say? Would Christ fund affordable housing, education, and transportation for the most vulnerable? Partridge declared that he is a Christian and an advocate for seniors, disabled people, children, middle class families, teachers and other public employees. He encouraged people to recall Gov. Rick Snyder.

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

Next council meeting: May 2, 2011 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron St. [confirm date]

Left to right: Teddy Bear (on screen); DDA board member Newcombe Clark; Ward 1 city council representative Sabra Briere. Clark and Briere were chatting during the break between the regular DDA board meeting and the DDA board retreat. Briere did not take part in the meetings – she was there as a member of the public. The teddy bear was featured in a video short that was meant to kick off the retreat with a bit of humor. (Photos by the writer.)

Two days later, at Wednesday’s meeting of the DDA partnerships committee, board member Gary Boren reported back to his colleagues about the conversation that had taken place at Monday’s mutually beneficial committee meeting. Boren was frank in his assessment that the city’s team appeared intransigent.

To Boren, it appeared that city representatives had staked out their position, and they saw anything less than that position as meaning the city was not receiving what it is properly owed. For his part, Boren considers the DDA to be in the driver’s seat, because the current contract runs through 2015, and would not require the additional payments the city is seeking for that period.

At the partnerships committee meeting, Susan Pollay – executive director of the DDA – drew attention to the fact that there will be an increasing sense of urgency to firm up the contract as both the city and the DDA put together their respective budgets for the next fiscal year. The city administrator will need firm numbers by March, she suggested.

In this report, we put Boren’s comments and the ensuing discussion by the DDA’s partnerships committee in the context of the DDA’s board retreat last week, when board chair Joan Lowenstein noted, “We’re not a savings bank. We’re supposed to spend money.”

The retreat included a discussion of the kinds of projects the DDA would like to undertake over the next 10 years, some of which would need to be deferred, depending on the amount of parking revenue the DDA passes through to the city. The DDA also appears ready to defer some of its scheduled maintenance to the parking decks, if the maintenance activity is of a more aesthetic or cosmetic nature.

It emerged during the retreat that the politics of parking contract negotiations include the city’s ability to fund public safety – firefighters and police. The speculation was floated at the retreat that it might actually help the city’s negotiating stance with its labor unions, if the DDA took a firmer approach to the parking contract.

DDA Board Retreat (Jan. 5, 2011)

At the regular board meeting that took place just before the board’s retreat, retiring management assistant Joan Lyke remarked that retreats are just extended board meetings. This one extended only through about 3 p.m. after starting a bit before 1 p.m.

DDA Retreat: Parking Contract, Development Plan – Brief Background

The current 10-year contract, under which the DDA manages the city of Ann Arbor’s parking system, runs from 2005 through 2015. It stipulates that the DDA will pay the city $1 million for each year of the contract, but provides the city with the option of requesting up to $2 million in any given year, as long as the total amount paid by the DDA for the 10-year term of the contract does not exceed $10 million. For each of the first five years of the contract, the city requested $2 million.

The idea of renegotiating of the parking contract was first floated publicly in the form of a city council resolution passed in January 2009. That resolution was prompted by the city’s financial plan for FY 2011, which included an additional $2 million payment by the DDA that was not required in the contract. The DDA board eventually approved what amounted to a unilateral revision to the parking contract in April 2010, by agreeing to pay the city $2 million not required in the original contract. [See Chronicle coverage, which includes more detailed background: "DDA Approves $2 Million Over Strong Dissent"]

Since June 2010, two committees – one from the city council and another from the DDA board – have been meeting in public view to discuss the renegotiation of the parking contract.

The parking contract discussions have taken place in parallel with a conversation about how the DDA might lead the development of downtown city-owned parking lots. Those conversations have now, to some extent, been decoupled, and are continuing on independent paths. At the DDA board’s regular meeting on Jan. 5, it passed a resolution urging the city council to pass a resolution of its own, authorizing the DDA to engage in the development of a parcel-by-parcel development plan for downtown. [Chronicle coverage: "DDA Embraces Concept of Development Plan"]

Discussions of the new parking contract began with a focus on providing the DDA with a role in the enforcement of parking codes. [From August 2010 Chronicle coverage: "DDA Parking Prospects Dim"]

The negotiations have evolved, however, to focus more on the structure and amount of the payments by the DDA to the city. Whereas the current contract sees the parking payments as “rent” for the use of city-owned facilities, the conversation is now centered on the idea of a percentage-of-gross parking revenues payment that the DDA would make to the city. A key question has become: At what level should that number be set?

The initial, tentative number discussed by the two mutually beneficial committees was 17.5% per year. [Chronicle coverage: "Column: Impact of City-DDA Parking Deal"] By the time a draft of the proposal was presented to the city council and the DDA board in late 2010, that number had been revised downward to 16% in the first two years of a new 10-year contract – FY 2012 and FY 2013 – with 17.5% stipulated for each of the following eight years. [Chronicle coverage: "Wrangling on City-DDA Parking Details"]

DDA Retreat: The Numbers – General

The board’s retreat began with a video that board chair Joan Lowenstein had put together, which was intended to provide a lighthearted way to start the discussion. The moral of the tale – a conversation between two teddy bears – was that parking is not free and that you can’t pay for other services like park maintenance, just by raising parking rates.

Underpinning the substance of the board’s retreat discussion was a spreadsheet used by the DDA to evaluate its 10-year plan. That spreadsheet includes a number of variables and assumptions that can be adjusted on-the-fly to evaluate  the impact on the DDA’s financial condition. The retreat’s spreadsheet reflected a number of assumptions that were different from the spreadsheet discussed by the two mutually beneficial committees at their Nov. 8, 2010 meeting. [.xls of the 10-year spreadsheet as it stood at the conclusion of the board's retreat]

DDA Retreat: The Numbers – Payments from Parking Fund

One difference between the spreadsheets was this assumption at the board retreat: For the first four years worth of  bond payments required for the Fifth Avenue underground parking garage currently under construction, the DDA’s TIF (tax increment financing) fund will be used to make 100% of the payments. Previously, the parking fund would have been tapped for the bond payments. [The DDA's budget is divided into four funds: parking, parking maintenance, TIF, and housing.]

Making the bond payments from the TIF fund, instead of tapping the parking fund, would allow the parking fund to show a positive fund balance in all years of the 10-year plan. The previous version of the spreadsheet had shown negative fund balances for the parking fund for some years.

Board chair Joan Lowenstein remarked that the positive fund balance in the parking fund demonstrated that the TIF fund was not being used to pay for any revision to the parking contract.

Another key difference – necessary to allow the DDA’s parking fund now to show a positive balance in all years – would be the elimination in FY 2011 of the regular $2,093,605 transfer from the parking fund to the parking maintenance fund. There would also be a reduction of that transfer to $1,647,121 in FY 2013. However, the total transfers to the city’s maintenance fund over the 10-year planning period would still reflect an average contribution of a bit more than $2 million per year, by increasing those fund transfers in later years.

At the retreat, Susan Pollay, the DDA’s executive director, said that the parking maintenance fund transfers were informed by consultation with Carl Walker Inc., which is under contract with the DDA to inspect the parking structures on a regular basis and to develop a 20-year maintenance plan. [.pdf of Carl Walker parking maintenance plan] Carl Walker had been asked to identify items in the maintenance plan that are not as time sensitive, and to come up with numbers for a revised maintenance schedule. The intention is for any deferred maintenance activity to fall into the more cosmetic or aesthetic categories.

DDA Retreat: The Numbers – DDA Obligations

Among the numbers in the spreadsheet receiving scrutiny was the total amount of transfers from the DDA to the city. Newcombe Clark wanted to know if the $68,000 per year interest-only payment that the DDA makes for the surface lot at Fifth and William [the old YMCA lot] was included. It was not. Roger Hewitt told Clark that the issue would be raised with the city.

At Clark’s request, the DDA’s planning documents also now categorize as a grant the $508,608 annual payment the DDA makes to the city in connection with the city’s new municipal center. The transfer had previously been categorized as a bond payment.

Also in connection to DDA obligations to the city, Clark raised a point at the retreat that he’s previously made: The city charges the DDA overhead fees for bonds it issues on the DDA’s behalf. Roger Hewitt told Clark that the issue had been taken up with the city and that it had “fallen on deaf ears.”

DDA Retreat: The Numbers – DDA Initiatives

Another change from a previous version of the 10-year plan spreadsheet was an assumption that funding for alternative transportation, in the form of support for the go!pass program, would be extended through the 10-year period. Previously, the guiding philosophy for development of the DDA’s 10-year plan had been to include only board-approved expenditures. Funding for the go!pass program has received board approval only through FY 2013.

At the retreat, Roger Hewitt noted that while funding for the go!pass program has been included each year in the 10-year plan, it should be up for discussion. Hewitt has historically raised the question of the whether the go!pass program – which provides subsidized bus passes to employees of businesses located downtown – actually results in downtown commuters choosing the bus over driving their own cars, or if the program simply further subsidizes bus rides for downtown employees.

Susan Pollay, executive director of the DDA, points to the results of the dot-voting exercise.

In the interest of trying to estimate what kinds of financial resources the DDA would need in order to undertake initiatives central to its mission, DDA board member Sandi Smith had designed a dot-voting exercise for the retreat. Each board member was given one red dot to assign to a project they’d like to see done in the short term, two yellow dots for medium-term projects, and three green dots for longer-term projects [photograph of  the dot-voting result].

The projects receiving votes ranged from a proposed reconfiguration and extension of sidewalks along State Street, to Huron Street improvements. The Huron Street improvements were added to the original list by board member Newcombe Clark. The State Street improvements, which would expand the opportunities for sidewalk dining, have been mentioned by mayor John Hieftje at recent meetings of the DDA board.

However, the  goal of the exercise was not to select projects but rather to get a ballpark idea of the amount of money that the DDA might like to invest from its TIF fund over the next 10 years. An initial ballpark estimate, based on the dot-voting, was $0.5 million per year over the first five years of the planning period, and $1 million per year over the final five years. Board member John Splitt remarked that he did not think $1 million per year would be adequate.

When DDA deputy director Joe Morehouse plugged the ballpark estimates into the spreadsheet, board members saw the impact on fund balances projected on the screen. So the board reduced the numbers in the first five years to $200,000 for the first two years, and $400,000 for the third and fourth years.

DDA Retreat: The Numbers – Board Deliberations (Fund Balances)

The discussion of an appropriate percentage-of-gross parking revenues figure for the DDA to transfer to the city was framed in terms of the impact on the DDA’s fund balances. Assuming no additional projects would be undertaken by the DDA, the overall fund balances in the spreadsheet, expressed in terms of percentage of operating expenses, were: 19.3% (FY 2012); 15.4% (FY 2013); 18% (FY 2014); 18% (FY 2015); 18.6% (FY 2016); 29.6% (FY 2017); 42.6% (FY 2018); 52.7% (FY 2019); and 72.2% (FY 2020).

Assuming some level of DDA project activity, as reflected in the dot-voting, the DDA fund balances would be diminished in the initial years of the plan as follows: 19.1% (FY 2012); 15.1% (FY 2013); 16.3% (FY 2014); 15.4% (FY 2015); 9.6% (FY 2016); and 12.3.6% (FY 2017).

The concern for low fund balances as expressed as a percentage of operating expenses was driven by the assumption of 18% as a minimum reserve goal.

Mayor John Hieftje questioned the need for fund balances that high. Susan Pollay indicated that the 18% figure had come from the city of Ann Arbor’s chief financial officer, Tom Crawford, and that he is pushing for the city to increase its reserve balances to that level as well.

Pollay’s contention is supported by Crawford’s remarks made at the Feb. 17, 2009 city council meeting, when the city council authorized the financing for the Fifth Avenue underground parking structure – after reducing its scope due to concerns about the DDA’s ability to finance the project. From The Chronicle’s report of the Feb. 17, 2009 council meeting:

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

In the context of the city’s general fund budget, Crawford has also often mentioned smaller reserve amounts, generally in the range of 8-12%. From The Chronicle’s report of the Oct. 18, 2010 city council meeting:

Crawford noted that the expenditures – because they modify the budget – require eight votes on the 11-member council. He also noted that the currently projected fund balance is around $10.8 million, or around 13% of expenditures. He compared that with the minimum range of 8-12%, where they generally like to operate.

However, the reserve policy recommended by Crawford is not as simple as a percentage to be achieved in a given year. In the wake of discussions in 2009 about the scaling back of the Fifth Avenue underground parking structure’s size, due to DDA fund balances that Crawford had felt were too low, DDA board members had questioned whether the city itself had a minimum reserve policy. Writing to DDA board members in an email dated March 7, 2009, then-city councilmember Leigh Greden offered:

I understand there has been some discussion at the DDA that the City does not have a minimum reserve policy similar to the one Tom Crawford has been recommending for the DDA. In fact, the City DOES have a minimum reserve policy, and has had such a policy — in writing – for years. The policy has been printed in the City’s Budget for years, and reads as follows: The City shall “maintain an undesignated General Fund balance with a minimum range of 8% to 12%; provided that when necessary use of these funds occurs, subsequent budgets will be planned for additions to fund balance to maintain this standard over a rolling five-year average.” Tom Crawford has repeatedly urged the City to exceed this policy by maintaining an undesignated General Fund reserve of 15%. Consistent with Tom’s recommendations, the City has exceeded our policy by maintaining an undesignated General Fund reserve of 15-20%.

At the DDA’s Jan. 5 board retreat, Newcombe Clark said that if 18-20% is recommended as a minimum balance, then 12% is too low. Asked by board members at the retreat for comment, DDA deputy director Joe Morehouse indicated that the percentage of operating expenses is one way to look at fund balances, but that the actual amount of cash on hand is also important.

DDA board chair Joan Lowenstein expresses her preferences during the dot-voting exercise. To her left is board member John Splitt. Board member Gary Boren is standing to her right.

Morehouse put cash on hand in the context of the current year, when the DDA is writing checks for the Fifth Avenue underground construction project that are in the $2.5-million range. He expressed concern about how to deal with hypothetically possible construction overages. Susan Pollay added that some of the parking decks are very old, implying that even with the systematic maintenance program, there could be unanticipated expenditures. Morehouse indicated that independent of a percentage figure, he felt more comfortable with a fund balance of around $3.5 million than the $2.5 million corresponding to the projected 9.6% in FY 2016.

The newest DDA board member, Bob Guenzel, reminded the board that the idea behind expressing a reserve balance as a percentage of operating expenses is to gauge how long an organization can continue to meet its financial obligations if all revenue were to cease.

In trying to give direction to its mutually beneficial committee as their conversation with the city’s committee moves forward, the DDA board reached a consensus that what the DDA’s committee should convey to the city council’s committee were two key points: (1) the fund balances that the DDA board wanted to see were 12% minimum and ideally 15%; and (2) cash on hand should not go below $3.5 million. In terms of percentage-of-gross parking revenues to be transferred to the city, those principles translate to a number that is closer to 15% than the 16-17.5% that the city has discussed.

For his part, Hieftje was adamant that he was not a part of the DDA board’s consensus. He suggested that the response of the council’s mutually beneficial committee would be: “What the hell happened?”

DDA Retreat: The Numbers – Board Deliberations (Politics of Saying No)

In response to the possibility that the city might not get the amount of money from the DDA that it’s received historically, Hieftje indicated that the impact would be police and firefighter layoffs – there is no other place in the budget to look, Hiefjtje contended. By way of background, the budget for FY 2011 that city administrator Roger Fraser proposed last year included police and firefighter layoffs, most of which were avoided, when the DDA decided to unilaterally alter the parking contract and make an extra $2 million payment to the city.

Clark’s response to Hieftje: “Why is that on our backs?”

Hieftje answered by telling Clark that “the DDA is an arm of the city.” Clark’s response: “That’s not what we’re volunteering our time for.”

By way of background, at the July 12, 2010 meeting of the two mutually beneficial committees, DDA board member Roger Hewitt had stated his assumption in working on the DDA’s committee was that the DDA was not an “arm of the city.” From Chronicle coverage of that meeting:

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

DDA board chair Joan Lowenstein ventured that as the city tries to work with its labor unions, it might actually help the city if the DDA were to make only transfers that still would allow it to maintain higher fund balances. If the DDA acts as an ATM for the city, there is no shared sacrifice between the city and its unions, she said.

Hieftje expressed skepticism that this would be relevant, given that bargaining with the public safety unions is subject to Act 312 arbitration.

Partnerships Committee (Jan. 12, 2011)

By way of general background, the DDA board divides its work among committees: partnerships; bricks and money; economic development and communications; and transportation. The committees meet once a month, and Wednesday was the regular meeting of the DDA’s partnerships committee.

During the break between the regular DDA board meeting on Jan. 5 and the board's retreat, board member Gary Boren (left) chats with Ray Detter, president of the Downtown Citizens Advisory Council.

The partnerships committee spent its first hour discussing the DDA’s energy savings grant program. Executive director Susan Pollay stressed the importance of recording the potential future financial liabilities of the program – the 50% match, up to a cap of $20,000 per project – as figures that participants might ask for, not as amounts that the DDA had committed. The program includes an audit phase and an implementation phase, but not every participant in the audit phase necessarily makes installations based on the recommendations of the audit. Pollay’s point was that the amount that participants could claim as DDA matches exceeds the amount the DDA has budgeted – but it’s a first-in program.

The need to stress this fact to program participants is particularly important, Pollay said, as the DDA begins to operate in a climate where it has less financial flexibility than in the past.

Partnerships: Taking a Haircut

In reporting to the partnerships committee about the conversations that had taken place on Monday, Jan. 10, Gary Boren said they’d presented as problematic the 16-17% figure as the percentage-of-gross parking revenues to be transferred to the city. The DDA’s committee, Boren said, had expressed concern about the DDA fund balances. Boren reported that they’d conveyed to the council’s committee that a percentage-of-gross in the range of 14-15% should be more palatable.

Boren said that Christopher Taylor (Ward 3), who serves on the council’s committee, had responded with a suggestion that Boren wished he himself had thought of: If the DDA’s concern was its fund balances, then the city could insure it. However, Boren wondered what an “insurable event” would be. The idea left a lot of details to be worked out. You can’t guaranteed the vote of a future council as far as what might fall within a risk guarantee, he concluded.

And as Boren’s report to the partnerships committee continued, mayor John Hieftje’s remarks at the Jan. 5 retreat proved prescient – Hieftje had ventured that the city council’s mutually beneficial committee would react to the lower percentage-of-gross by saying, “What the hell happened?”

To Boren, it appeared that the city’s position is intransigent. He pointed to Taylor’s characterization of the lower, 14-15% figure as a percentage-of-gross transfer as the city “taking a haircut.” In fact, said Boren, “nothing is in the bag,” but the city’s original position is all they’ll accept. [By way of background, "taking a haircut" is a phrase sometimes used in the world of finance to characterize a situation where the holder of a loan is willing to accept a lesser amount than is actually owed.]

Boren indicated that on Monday, the DDA committee has told the city council committee that for the majority of the DDA board, the 16-17% figure is unacceptable, because of the impact it would have on fund balances in the context of projects the DDA would like to undertake that are within its mission.

The city council is refusing to lay out for the DDA what they actually need for their budget, Boren said, but the council appears to be saying: Give us this much, or else. Boren called it a bad attitude for a potential business partner. And what is the “else”? Boren wondered.

Sandi Smith, a DDA board member who also serves on city council, gave Boren a possible answer: The city takes responsibility for the public parking away from the DDA, and shoulders that responsibility itself. Smith quipped that the “nuclear option” had evolved from the dismantling of the DDA, to simply taking away the public parking system. [Smith was alluding to the very briefly mentioned idea of dismantling the DDA, that had come at a 2009 city council budget retreat.]

Boren appeared content that the city might take back responsibility for the parking system, saying that the DDA would have five years to plan. [There are now actually only four years remaining in the contract.]

Susan Pollay reminded the partnerships committee of the timetable for setting the budget: the council must approve it in May; the city administrator must submit it in April; the city administrator needs numbers by March. In that context, she said, there would, from now forward, be an increased sense of urgency. She cautioned that the best work and thinking was not always done in the context of urgency. She reminded the committee that in addition to the percentage-of-gross figure, other aspects of the parking contract still need to be worked out, including the definition of the parking district boundaries and the rate-setting powers.

Keith Orr repeated a sentiment he’s expressed at previous board meetings, that compared the situation faced by the city and the DDA to labor negotiations. When there’s a request to a union to re-open a contract before it expires, the union response is typically, OK, show us your numbers. And the city had not shown the DDA its numbers, he said. Perhaps now was a time to be proactive, he said, and present a proposal for the percentage-of-gross figure and for the other contract details. That would perhaps get the two parties to the proposal-counter-proposal stage.

Pollay asked what option the DDA might have if the city continued to say, No, no, no. Smith ventured: “What if the DDA said, No?” Answered Boren, “That would be great!” At one point Boren suggested that the DDA should simply say: “Here’s what you get: 14%. I think they should be happy.”

Joan Lowenstein picked up on Orr’s idea that what the DDA would like to see are the city’s numbers: Why does the city need the specific amount it wants? She suggested that now, as the city departments are working on their budget numbers, would be a convenient time to extract those figures. The DDA would need help from councilmembers to make those requests, she suggested.

Two city councilmembers were in the room for the partnerships committee meeting: Sandi Smith (Ward 1) who also serves on the DDA board; and Tony Derezinski (Ward 2), a city council representative to the DDA’s partnerships committee.

What’s Next? (Jan. 18, 2011 City Council Meeting)

The city council’s Jan. 18 agenda includes the city council resolution authorizing the DDA to develop a parcel-by-parcel plan for the city’s downtown surface parking lots. Although the parking contract and the development plan have been decoupled in the city-DDA conversation, any city council debate on the resolution could provide some insight into city council attitudes towards the DDA.

DDA board members before their meeting began: Bob Guenzel (foreground); John Mouat (arms extended); Sandi Smith (partially obscured); Russ Collins (jacket and tie). Mouat was not demonstrating how a HAWK pedestrian signal flies. (Photos by the writer.)

But board members heard a series of reports, including a look at the financial picture from the first quarter of FY 2010. Fund balances are lower than they’ve been historically – something the board knew to anticipate with the construction of the new underground parking structure along Fifth Avenue. The report from the capital improvements committee indicated that the project is proceeding apace, with headway being made on solving a problem with de-watering the site. During public commentary, the board heard from proponents of putting a community commons on top of the underground parking garage once it’s completed.

At the meeting, the board indicated that they’d take an extended look at their 10-year budget projections at a board meeting in early 2011. Affecting the DDA’s 10-year plan are at least two major items: (1) the Fifth Avenue underground parking garage construction, and (2) ongoing negotiations with the city of Ann Arbor on the amount of “rent” to be paid by the DDA to the city as part of the parking contract under which the DDA manages the city’s parking system.

Other reports from the meeting with a potential effect on the DDA’s budget included an update on the City Apartments project planned by Village Green and located at First and Washington. The DDA is slated to purchase the parking deck component of the project on its completion – for $9 million. Included with the board’s packet were a series of proposed amendments to the parking agreement between the city of Ann Arbor, Village Green and the DDA. Village Green is scheduled to complete its purchase of the First and Washington parcel in May 2011.

Other potential impacts to the DDA’s budget included a report from the board’s partnerships committee that noted a request for grant funding from the Ann Arbor Housing Commission, plus an additional grant funding request from the Shelter Association of Washtenaw County.

The report from the board’s transportation committee included discussion of enhanced service between Ypsilanti and Ann Arbor, as well as the possibility of adapting the #17 route to serve a partial circulator function for downtown. Also related to transportation, the board received a presentation from Pat Cawley, a city of Ann Arbor traffic engineer, on the installation of a new HAWK pedestrian crossing signal at the intersection of Chapin and Huron.

The board also heard from representatives of the Main Street Business Improvement Zone on the delivery of a blueprint for creating other such zones in the downtown.

DDA Finances

The DDA’s financial state was a major theme of the meeting.

DDA Finances: First Quarter Fund Report

Roger Hewitt gave the report from the operations committee meeting. Highlights of that report included an end-of-first-quarter report on the status of the four funds that make up the DDA’s budget: TIF (tax increment financing), parking, parking maintenance, and housing. Hewitt noted that there is some fluctuation based on the payment of construction invoices and reimbursements from the city.

Hewitt pointed out that TIF fund revenues were slightly less than expected. After the first three months of the fiscal year – July through September 2010 – projections are now that $3,850,000 will result from the DDA’s capture of a portion of downtown property taxes. The DDA’s budget calls for $3,935,790 to be collected, or 2.23% more than currently projected. Hewitt noted that this was less than 3% variation. Capital expenses to be paid out of the TIF fund, Hewitt said, would include payments on the Fifth and Division streetscape improvements and would at this point be estimated to come to a total of $2 million for the year – the budgeted amount was $2,020,753.

Based on first-quarter reports, parking revenues are now expected to total $14,635,108, or $378,818 less than budgeted. Hewitt noted that the difference between current projections and the budget amount – which is 2.59% – is still less than 3% variation. Hewitt attributed the shortfall to the fact that the budget was made based on an assumption that parking rate increases would be implemented starting July 1, but the increase had been delayed until Sept. 1.

In September 2010, the most recent month for which data is available, the increase in revenue – despite a decrease in hourly patrons at parking structures system-wide – was attributed to the parking rate increase. The number of hourly patrons was also down for the first quarter of the year, July-September 2010. [Hourly patrons are those who park in structures and pay by the hour, as opposed to purchasing a monthly permit.]

Joan Lowenstein asked if they would see an uptick in hourly patrons for holiday shopping. Joe Morehouse, deputy director of the DDA, indicated that yes, this is typically the case.

Russ Collins noted that for the first quarter, revenue had shrunk by 1/4 of 1% and hourly patrons had decreased 3%. He concluded that this reflected the fact that there is still demand in the system.

John Mouat was curious to know why the Maynard structure showed an increase in the number of hourly patrons, but a decrease in revenues. The explanation was that Maynard had been used for construction parking for the University of Michigan North Quad, with up to 100 construction workers a day parking there. Construction is now complete, said Hewitt, so it will take a while for people to get used to the increased availability of parking there.

DDA Finances: Village Green

The board received an update on the City Apartments project by Village Green, located at First and Washington. The DDA is slated to purchase the roughly 250-space parking deck component of the project on its completion – for $9 million. Included with the board’s packet were a series of proposed amendments to the parking agreement between the city of Ann Arbor, Village Green and the DDA.

At its Aug. 5 meeting, the Ann Arbor city council authorized an extension to the purchase option agreement with Village Green, and that authorization included a series of milestones, which is intended to result in the completion of Village Green’s purchase of the First and Washington parcel in May 2011. The milestones call for a parking agreement to be executed by the DDA by Nov. 21.

DDA staff have made a number of recommendations for amendments to the parking agreement with Village Green. At Wednesday’s meeting, Susan Pollay, executive director of the DDA, noted that the amendments were intended to ensure that the parking deck would be completed with the specification that it have a 75-year life and that copies of all relevant environmental reports and certifications would be provided to the DDA.

John Splitt encouraged board members to have a look at the draft of the Village Green amendments, saying that he wanted to have as many eyes on it as possible.

DDA Finances: 10-Year Plan

The operations committee report wound up with a discussion of the DDA’s 10-year plan. Russ Collins noted that the document contains the financial projections for the next 10 years and is constantly revised. Roger Hewitt confirmed that it was revised regularly, and he indicated the revision schedule was every three months. Collins noted that the document was not some kind of narrative or mission statement, but rather deals with hard numbers.

The conversation from Collins and Hewitt noted that there would be three or four years in the near future with fund balances that are significantly lower than board members are accustomed to seeing. At the Jan. 5, 2011 board meeting, there will be an extended operations committee report, to walk through the 10-year plan. Joan Lowenstein asked that board members who might not be able to attend on that date – due to the holiday period – let her know so that the meeting could be rescheduled if necessary.

By way of background, the projected fund balances for the DDA were the subject of scrutiny by city of Ann Arbor CFO Tom Crawford in early 2009, when bonds for the underground parking garage were authorized by the city council. His concerns had resulted in the downsizing of the project by 100 spaces – the extension of the underground excavation to William Street was eliminated. The benefit that proponents had claimed for the extension was the ability to create an underground connection from the parking structure to whatever development might be constructed on the Fifth and William street lot [aka the old Y lot] and to the Ann Arbor Transportation Authority’s Blake Transit Center.

From The Chronicle’s coverage of the Feb. 17, 2009 city council meeting:

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

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

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

…

[Sabra] Briere continued her questions with Crawford.

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

Crawford didn’t mince words: “No.”

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

Even with the reduced size, said Crawford, it’s still really unaffordable, but it’s within reach for the DDA to explore other options. Asked by Briere as a followup to that, if the DDA would need to raise parking rates even further, replied Crawford: “That would be up to the DDA.”

In the current version of the DDA’s 10-year plan, the combined fund balances for the parking fund and the TIF fund are shown as negative for FY 2011-13. But combined fund balances for all four funds – including the parking maintenance fund balance and the housing fund balance – would be positive for the 10-year period.

Expressed as a percentage of operating expenses, here’s what can be calculated based on DDA projections:

      COMBINED      BALANCE AS
YEAR  FUND BALANCEs % of EXPENSES

2010 $10,621,218    56%
2011   5,274,003    27%
2012   2,667,637    13%
2013   1,692,514     8%
2014   3,052,667    15%
2015   4,402,736    21%
2016   7,065,031    33%
2017  10,482,627    47%
2018  14,172,518    65%
2019  17,764,457    79%
2020  22,757,279   103%

-
The current 10-year plan assumes a $2 million payment to the city each year – designated as a contingency. It also assumes that the funding of alternative transportation in the form of the getDowntown program’s go!pass would end after 2013 – that’s currently about a $500,000 annual program. The current 10-year plan also does not allow for continuation of the energy saving grant program or any housing grants after 2013.

DDA Finances: Mutually Beneficial Committee Report

The future of DDA finances will be impacted by current negotiations between the city of Ann Arbor and the DDA about the amount of rent the DDA should pay to the city for the use of the parking facilities that it manages for the city.

Roger Hewitt reported that the two mutually beneficial committees – from the DDA and the city council – had met twice in October. The two committees are renegotiating the contract under which the DDA manages the city’s parking system. At this point, he said, they need some feedback from the city council as a group. A work session on the DDA’s proposal for a development process would be held at 6 p.m. before the regular city council meeting the following day, Hewitt said. On Nov. 15, there will be another working session of the council to focus on the parking agreement itself.

Based on The Chronicle’s observation of the October meetings of the mutually beneficial committees, among the central issues now under discussion are (1) whether the DDA should be able to set parking rates without a city council veto, and (2) how the amount paid by the DDA to the city might escalate – to what is now typically described in committee meetings as $3 million. The $3 million figure does not itself reflect an escalation, but rather the inclusion of the $2 million in “rent” plus the roughly $1 million that the DDA pays into the city’s street repair fund.

DDA Finance: Partnerships Grants – Energy Saving

The report out from the partnerships committee was given by Keith Orr, because the two co-chairs of the committee, Russ Collins and Sandi Smith, had been unable to attend their meeting. The report included a discussion of various grants.

The DDA administers a grant program to encourage downtown property owners to invest in energy saving improvements. It includes an audit that’s paid for by the DDA and generally costs $2,000-$5,000. The program also includes a 50% DDA match on implementing recommended improvements – with a maximum payout by the DDA of $20,000 for each building. The audit is Phase I and the implementation is Phase II.

Based on the materials in the board’s packet, the DDA has paid $298,818 since the start of the program in FY 2009. Including the DDA-paid portion, a total of $241,253 has been spent on installation of energy-saving measures.

Orr reported that to date, 71 audits had been approved. Applications are currently available for this year’s program.

DDA Finances: Partnerships Grants – Housing

Orr reported on two housing grants on which no decision had yet been reached. One is for additional money to be granted to the Shelter Association of Washtenaw County. At its October meeting, the board had approved $218,050 for various capital investments, while holding in abeyance an additional $113,210 for solar panels. From The Chronicle’s report of the October DDA board meeting:

At the partnerships committee meeting, the consensus reached by members was that they should proceed with the recommendation for the $218,050 worth of improvements, while holding in abeyance the approval of more than $113,210 for installation of solar panels and for computer hardware at the shelter.

Committee members had concerns about the length of the payback period for the solar panels, which appeared to be much longer than the kind of payback on investments the DDA is familiar with in connection with its energy saving grant program.

At Wednesday’s board meeting, Orr reiterated the concern that the committee had about approving the grant, noting that it was a projected 29.2-year payback period – relatively long.

Orr also reported that the Ann Arbor housing commission had approached the DDA with a request for a grant. The housing commission, said Orr, maintains 355 low-income housing units across 17 sites in the city. The grant would specifically target Baker Commons, Orr said, which is a building located at the intersection of Packard and Main. The grant would be for a 50% match on $500,000, Orr said, and would be used for window replacement, hallway carpet, and parking lot resurfacing. The committee had not reached a decision about whether to recommend making the grant, Orr reported.

DDA Finances: Partnerships Grants – Solar

The Michigan Theater had made a request for $35,000 to help support a solar demonstration project that would be mounted on the side of the theater. Orr reported that no decision had been made on that proposal. [In August, the city's historic district commission had approved the installation plan: "More Solar Energy Projects In the Works"]

Library Lot

The city-owned parcel known as the Library Lot is the location of an ongoing construction project by the DDA – an underground parking structure that will provide parking for 660 cars.

From the top of the Fourth and William parking deck, this is the view to the east, of the east leg of the underground garage as the first floor of the deck is getting poured.

Library Lot: Construction Update

Reporting out from the capital improvements committee, John Splitt said that 300 yards of concrete had recently been poured for the first floor of the east leg deck. With respect to the de-watering problems that he had noted at the previous month’s meeting, Splitt said the water level is now dropping. This had allowed the foundation to be built for the tower crane next to the library. Once the tower crane is built, he said, the pace of the construction would pick up.

Mass excavation is 96% complete, Splitt reported. So far 240,000 cubic yards have been “excavated and removed.” When he stumbled over the word “excavated,” Splitt’s board colleagues kidded him, saying he should just say, “dug up.”

Library Lot: RFP Review Committee

John Splitt reported that the RFP (request for proposals) review committee had not met since the last board meeting. The committee has not met since the spring.

Library Lot: Commons

Two people addressed the board during public commentary on the topic of the development of the top of the underground parking garage. Introducing himself by saying, “Hello folks, I think you’ve seen me before!” was Alan Haber. He indicated that he continued to talk to the community about the idea of a community commons on top of the underground parking structure. He was there, he said, to show them some drawings and sketches, made by Stephan Trendov, an architect and urban designer who also addressed the board. Haber stressed the economic benefits of a commons. He said the proposal was to maximize people space and subordinate automobile space.

Trendov described himself as a “conceptualist.” The evolution of a city, he said, is based on water. He said that as he’s lived in Ann Arbor and walked the streets with people like Shakey Jake, he’s noticed that there is a “hardness.” It’s not the kind of city we want, he said. The concept for the top of the underground structure that he had sketched, he told the board, doesn’t interfere with the light wells that are meant to help illuminate the lower floors of the underground garage. His design also does not interfere with access to the underground levels or with future development of the site.

At public commentary at the conclusion of the meeting, Trendov picked up on the theme of pedestrian amenities that Ray Detter raised in his report from the Downtown Citizens Advisory Council and their concerns about the alley connecting Liberty and Washington streets. Trendov warned that the University of Michigan had its eye on some of Ann Arbor streets – Monroe Street – and that it’s important not to let “the octopus” spread out further.

Transportation

Streets and transportation were another main theme of the board meeting.

Transportation: Downtown Citizens Advisory Council, Cut-Through

Ray Detter gave his usual report from the city’s downtown citizens advisory council. They’d received an update on transit issues, he said, from the DDA’s executive director, Susan Pollay, as well as an update from the panhandling task force. They’d also received an update on the status of Courthouse Square, which he described as “not very promising.”

Detter also described how Steve Kaplan had addressed the issue of the alley between Liberty and Washington streets. [The alley has long been the focus of concern – it's part of the public-private partnership connected with the Liberty Square (Tally Hall) parking structure. A year ago, the alley was discussed at a Sunday night caucus: "Council and Caucus: A Pedestrian Agenda"]

This was the issue that Trendov had alluded to during his closing public commentary. The current condition of the alley, with the smell of dumpsters placed close to it, was not conducive to use by pedestrians as a mid-block cut-through, Detter said. He stressed the need for all parties to carefully plan the future of the alley, and weighed in against a “helter-skelter” approach where only the developer of  the hamburger joint on the corner played a role.

Transportation: Buses, Bikes

John Mouat reported out from the transportation committee that they’d discussed service improvements between Ann Arbor and Ypsilanti with Chris White, manger of service development with the Ann Arbor Transportation Authority. The idea is to enhance service for those riders who work in Ann Arbor, but live in Ypsilanti. Route #4, he said, offered some interesting possibilities, including the idea of serving Blake Transit Center first, then the University of Michigan hospitals, instead of first serving UM, then BTC, which is how the current service operates.

Mouat discussed the idea of looping other funding partners, besides the DDA, into the mix by offering challenge grants.

The DDA’s transportation committee has in recent months also discussed the idea of resuscitating The LINK, which was a downtown circulator service jointly funded by the AATA, the DDA, and the University of Michigan. Riders did not pay a fare on boarding the buses. Mouat reported that White had discussed a possibility of altering Route #17 to increase circulation to the downtown area. Route #17 currently runs a loop up Division to the Amtrak station and back up Fifth Avenue.

Mouat also reported that a rental bike company would be offering a demonstration to the committee in late November. Quipped Russ Collins: “Will the bikes have snow tires?”

Mayor John Hieftje remarked that he felt even right-of-center voters were beginning to recognize the importance of transit and that there is a growing recognition that transit is something that southeast Michigan needs.

Transportation: HAWK Traffic Signal

What drivers and pedestrians will see when a HAWK signal is activated. (Image links to .pdf with higher resolution images.)

Pat Cawley, traffic engineer with the city of Ann Arbor, appeared before the board to alert them to the installation of a high intensity activated crosswalk (HAWK) traffic signal at the intersection of Chapin and Huron. He described how for the last year or more the city had worked with the Michigan Department of Transportation on the project. It’s considered a pilot project, the first to be installed in Michigan on a state trunk line. He stressed the need for pedestrians and motorists to know what to expect.

When not activated, he explained, motorists would see three black balls – two on top and one on the bottom. When a pedestrian presses a button to activate the signal, he said, there is some lag time for the signal to coordinate with other traffic signals. Then motorists see a flashing yellow, followed by a solid yellow, which is then followed by a twin-red solid stop beacon. Pedestrians get a seven-second white walking signal. That’s followed by flashing red for motorists and a 30-second countdown for pedestrians.

Cawley indicated that the underground construction is done. It’s hoped that the ribbon cutting can take place on Nov. 17, he said.

Asked after the presentation by The Chronicle if there was any potential for people to create mischief by simply standing and pressing the button, causing traffic to stop as a perverse entertainment, Cawley suggested that the delay – after the button press and before coordination with other traffic signals – and the length of the entire cycle would make that kind of mischief unattractive.

Reorganization of DDA Committees

Board chair Joan Lowenstein had indicated the possibility of a committee reorganization at the board’s October meeting. At Wednesday’s meeting, the board considered a resolution to reorganize its committees. The previous committee structure included committees for operations, capital improvements, partnerships and transportation. The new structure merges operations and capital improvements and creates an additional committee with responsibility for economic development and communications issues.

The resulting structure would be:

• merged operations/capital improvements committee: review financial statements; formulate budget; oversee parking operations; oversee parking agreement with the city; oversee construction.
• transportation committee: review getDowntown projects; personal transportation issues (bicycle parking, scooter parking, walkability); mass transit projects (coordination with the Ann Arbor Transportation Authority).
• partnerships committee: oversee DDA projects involving other entities like the city of Ann Arbor and the University of Michigan; housing fund expenditures; energy saving grant program; coordination with city council and the city’s planning commission.
• economic development/communications: background research for downtown redevelopment; inventory of city-owned sites; hiring of real estate experts and other consultants; facilitate process for development (public process and with the city council); assemble information on downtown’s assets for inclusion in promotional efforts of Ann Arbor SPARK, the regional economic development agency.

Asked by Keith Orr when the new committee structure would be implemented, Lowenstein indicated that it would begin right away. Several board members expressed uncertainty about scheduling and their ability to attend a December meeting of the new committee. DDA executive director Susan Pollay suggested that things would “sort themselves out” and that board members with an interest in attending would make that known, and that the meeting time would eventually accommodate the schedules of those who wanted to attend.

Outcome: The board unanimously approved a reorganization of its committees to include an economic development and communications committee.

Main Street BIZ Blueprint

Ed Shaffran and Betsy Jackson appeared before the board on behalf of the Main Street Business Improvement Zone. The DDA had provided start-up support to the MSBIZ initiative – a self-assessment district, which property owners along Main Street, between William and Huron, had voted to approve earlier this year.

Betsy Jackson and Ed Shaffran, who addressed the board on behalf of the Main Street BIZ, relax before the DDA meeting started.

The goal of the district is to provide a high level of services, such as sidewalk cleaning and snow removal. [Some previous Chronicle coverage of the formative stages of the MSBIZ includes "Work Session: Trains, Trash and Taxes," "Business District, Bicycle Parking Get OK" and "Ann Arbor Main Street BIZ Clears Hurdle"]

The DDA’s support of the MSBIZ – in the form of a $75,000 grant with a 10% contingency – had come with the expectation that a blueprint or template would be provided by the MSBIZ that could be used for the creation of other such districts in the downtown, or to expand the MSBIZ itself. From The Chronicle’s coverage of the DDA board’s April 1, 2009 meeting:

What about other downtown areas that might want to form a BIZ? In board discussion of the proposal, Sandi Smith had explained that out of the current proposal the DDA would get a template for creating other areas. In our phone conversation, [Ed] Shaffran suggested that another possibility was that other areas could be added to the Main Street BIZ. [The areas must be contiguous, according to the enabling legislation.] He said that the initial concept was to include the entire DDA district, but that they’d opted to start small and possibly expand.

At Wednesday’s DDA board meeting, Shaffran led off by briefly thanking the DDA for their support. He told them that the provision of services had now begun – from 5:30-6 a.m., sidewalks were getting cleaned. He reported that there was already a noticeable difference in the MSBIZ area as compared to the rest of the downtown. He indicated that they were coordinating with the city of Ann Arbor on snow removal and developing procedures for dealing with snowfalls of varying amounts.

Betsy Jackson gave a more detailed presentation on the MSBIZ strategy for providing a blueprint. The goals of the blueprint, she said, included: (1) creating an archive for the first BIZ, (2) providing details of the process for forming a BIZ, and (3) reducing grant requests to the DDA for the formation of future districts.

DDA board chair Joan Lowenstein reiterated that the DDA’s intention in providing support to the MSBIZ was not simply to provide seed money for one BIZ, but rather to help develop a template for the creation of other districts.

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

Absent: Gary Boren, Newcombe Clark

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

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

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

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

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

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

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

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

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

Downtown Development of City-Owned Property

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

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

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

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

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

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

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

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

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

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

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

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

Library Lot RFP Review Committee

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

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

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

Skatepark Support

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

Skatepark: Tabling the Resolution

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

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

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

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

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

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

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

Skatepark: Political Prism

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

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

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

Skatepark: Location, Location, Location

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

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

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

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

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

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

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

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

Policing the Downtown

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

Policing: Funding Source

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

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

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

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

Policing: Downtown Area Citizens Advisory Council Report

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

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

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

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

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

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

Detter stated that now we need action again.

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

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

Policing the Downtown: Partnerships Committee Report

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

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

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

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

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

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

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

DDA Finances: Bond Payments, Timelines, Parking Revenue

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

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

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

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

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

-

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

Changing of the Guard

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

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

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

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

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

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

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

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

Public Comment: Electric Cable

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

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

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

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

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

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

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

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

Absent: John Hieftje, Bob Guenzel.

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