Bricks: Part of the new streetscape improvements on Fifth Avenue in front of the DDA offices. Money: New ePark payment kiosks. As part of the Bricks and Money Committee report to the DDA board, John Splitt noted that the new street lights were being "wired as we speak." That was literally true – as evidenced by the yellow-vested, hooded electrician observed an hour before the meeting started. (Photo by the writer.)

The money is offered by the DDA as a challenge to other local organizations to support service enhancements on the route, which are estimated to have a total cost of $180,000. Board member Newcombe Clark described the grant as a great first step, adding “but man, is it a baby one.”

Although the transportation grant was the only vote taken by the board at the meeting, board members entertained discussion on two topics that are likely to receive a great deal of focus in the broader community over the next few months: (1) the future use of the Library Lot; and (2) the “mutually beneficial” discussions between the city and the DDA about the parking contract under which the DDA operates the city’s parking system.

The board also heard the usual range of reports from its committees. No one addressed the board during either of the two slots set aside for public commentary.

Ann Arbor-Ypsilanti Buses

Before the DDA board was a resolution that would offer a $14,417 challenge grant to fund service improvements for the Ann Arbor Transportation Authority Route #4 bus, which runs between Ypsilanti and Ann Arbor. The dollar figure for the grant is based on a total estimated price tag for the improvements of $180,000 and a Washtenaw Area Transportation Study (WATS) computer model, which estimates about 8% of riders on the #4 bus have destinations west of State Street in the DDA district. In response to an email query from The Chronicle, WATS transportation planner Ryan Buck explain some basics of the computer model:

The WATS model is a complex four-step travel demand model. There are two types of inputs to the model, one is the supply of transportation infrastructure which include available roads and transit routes. The second type of input is the demand, or the number and type of trips which are estimated from demographic information such as the number of people per household and the number of vehicles available to a household. We can change either supply side or demand side data and then analyze the impact on the transportation network.  A good example of this is to increase the frequency of a bus route such as the number 4. That increases the supply of available bussing and makes it a more attractive travel option which will likely increase the demand (riders).

This analysis looked at the number of trips for people who live in Ypsilanti and travel to the DDA area. The model estimates the total number of trips between the two areas as well as the percentage of people who will likely use a bus for their trip.  If we look at the riders on the #4 route we see that 8% of those riders are destined for the DDA area.

The DDA hopes the challenge grant will encourage support for Route #4 enhancements by other organizations – like the University of Michigan, Eastern Michigan University, private property owners, other municipalities, and the AATA. The improvements in service might include: increasing service frequencies to every 10 minutes; reducing travel time from 45 minutes to 38 minutes or less; or inclusion of a stop downtown before continuing to the UM Hospitals.

The resolution was introduced to the board by chair of the DDA transportation committee, John Mouat. He allowed that the dollar amount was “fairly modest” and also explained that the money had been previously budgeted but unused by the getDowntown program. It was a matter, he said, of redirecting previously budgeted funds. The earliest the service enhancements could be implemented would be in May 2011.

Mayor John Hieftje sketched an optimistic future with commuter rail servicing the connection between Ypsilanti and Ann Arbor with 10-minute travel times.

Newcombe Clark characterized the grant as a great first step, “but man, is it a baby one.” Clark has championed the idea of enhancing the transit connection between Ypsilanti and Ann Arbor since his appointment to the DDA board a year ago. He noted that there is other money in the DDA budget that has been allocated but not spent that is “burning a hole in [his] pocket.” He was alluding to $335,000 earmarked for support of the WALLY north-south commuter rail project. Previously, Clark has suggested redirecting the WALLY allocation to fund the policing of the downtown.

Outcome: The resolution to establish a challenge grant for service enhancements on the Route #4 AATA bus was unanimously approved.

Library Lot

Last year, the city of Ann Arbor issued an request for proposals for the future of the Library Lot – the top of the underground parking garage currently under construction by the DDA. The DDA has representation on the committee charged with review of the responses to the RFP. That committee consists of Stephen Rapundalo and Margie Teall [both on city council], Sam Offen [as a resident, although he is also a member of the city's park advisory commission], Eric Mahler [city planning commission] and John Splitt [DDA board].

Splitt has reported for the past several months that the committee has not met. Since late summer, the committee has been awaiting the completion of a report by The Roxbury Group, which is a consultant hired to help the committee assess the merits of the two finalist proposals from Valiant and Acquest. The DDA provided a grant of up to $50,000 for a consultant, half of which has now been paid to the Roxbury Group.

John Splitt led off the report of the committee by announcing: “We actually had a meeting.”  The meeting took place on Nov. 23, he reported, and the committee had received The Roxbury Group’s report. [.pdf of The Roxbury Group report]

Splitt described how The Roxbury Group had interviewed people who would have some interest in what impact a conference center or hotel could have. [Those interviewed by The Roxbury Group included: Josie Parker, director of the Ann Arbor District Library; Mary Kerr, president of the Ann Arbor Area Convention & Visitors Bureau; Mike Finney, president and CEO of  Ann Arbor SPARK;  Jim Kosteva, director of community relations for the University of Michigan; Bill Villisides, conference manager for UM conference services; and Diane Keller, president and CEO of the Ann Arbor/Ypsilanti Regional Chamber of Commerce.]

The evaluation based on interviews resulted in the conclusion that there’s a consensus about the need for a downtown conference center. Another conclusion related in The Roxbury Group’s report is the importance of synergies that may exist between the Ann Arbor District Library and a conference center, Splitt said. [The library is adjacent to the city-owned property where the underground parking structure is being built.]

Splitt also described how The Roxbury Group had interviewed the two finalist proposers and had recommended the proposal from Valiant as the favored one. One reason Splitt cited for Roxbury’s Group’s preference was that a conference center plus a hotel [as proposed by Valiant ] would have a greater benefit than a hotel alone [as Acquest had proposed – with a conference center possibly to be developed later, possibly at the Fifth & William lot]. The size of Valiant’s proposal was seen as having the potential to be a “game changer.”

A second reason Roxbury favored Valiant was that, while Acquest has more experience developing similar projects, Valiant’s proposal had more specificity and definiteness with respect to the financing.

Splitt reported that the city will now move forward with due diligence and development of a letter of intent.

Leah Gunn added that she thought the most exciting line in The Roxbury Group’s report was that “Valiant was able to strengthen the development’s potential for revenue generation, eliminating the need for any publicly-guaranteed debt.”

Newcombe Clark raised the question of whether it might be appropriate to include the Library Lot process with the ongoing discussions between the city and the DDA regarding “mutually beneficial” outcomes with respect to a renegotiated parking contract under which the DDA operates the city’s public parking system. The city-DDA discussions on the parking contract are taking place in parallel with a conversation about a more active role for the DDA in the development of city-owned surface parking lots.

Clark also expressed concern about the way Valiant had eliminated the need for $8.1 million of 30-year bonds to be issued by the city: The Valiant team had decided to add a 48,000-square-foot office space component to the project – reducing the square footage of the conference center from 32,000 to 26,000 square feet and reducing the number of condominium units from 12 to 6. The current market for rents, Clark said, is about half the rate of what would be needed in order to justify new construction.

Responding to Clark’s inquiry about linking the Library Lot project to the current conversation with the city about the DDA’s role in developing downtown city-owned surface lots, Splitt said that the Library Lot project was standing on its own. He expressed some uncertainty about the extent to which the DDA might provide some input on the creation of the letter of intent.

Responding to a query from Bob Guenzel, Splitt said he was not certain if the committee would meet again before the holidays or in January. Board chair Joan Lowenstein indicated that the DDA’s partnership’s committee would review the DDA’s input into the project.

Mutually Beneficial Discussion

Since the early summer of 2010, discussions between the city of Ann Arbor and the Ann Arbor DDA have been taking place in public on a renegotiation of the parking contract under which the DDA manages the city’s parking system. The existing contract runs through 2015. The city would like to renegotiate the contract so that the city continues to receive a roughly $2 million sum per year from the DDA for the next four years, as it has for the prior six years – it is money that the DDA does not owe under terms of the existing contract.

Each body has assigned a committee to undertake the negotiations. Roger Hewitt reported that the discussions had come to a point where a proposal would be brought to the DDA board and to the city council for reaction and feedback. The idea is to have something concrete to which the two bodies could react, he said.

Hewitt described the discussions as having been difficult but cordial, and the tentative proposal as “far from perfect.” But he said they now had something that could be discussed.

Before getting into the specifics of the proposal, Hewitt described two different views of the relationship between the DDA and the city. The first view, he said, was a contractual view: The city and the DDA have an existing contract that has four years yet to run, and any modification to that contract should include equal benefit to both sides. The second view, Hewitt said, is of the DDA as a political body made up of an appointed board, so the conversation had a layer of political context.

Hewitt said that because the DDA uses the city’s assets to operate the parking system, it makes sense for the city to have something to say about how the proceeds of the parking system are used. Previously Newcombe Clark has advanced the idea of the DDA purchasing city-owned surface lots as a mechanism for transferring money from the DDA to the city. At Wednesday’s meeting, Hewitt weighed in against that idea by saying that citizens would want some say about what the future use of the land would be, which a strict sale would not necessarily allow. The DDA’s proposal for development of the city-owned downtown surface parking lots, Hewitt said, was focused on generating a lot of input from citizens and from professional consultants.

The part of the conversations through the summer about the parking contract, Hewitt said, had resulted in a proposal with the following key features:

• Parking district: A geographic area would be clearly defined where the DDA would manage parking.
• No city council veto: The DDA would have the authority to set and change parking rates without a veto from the city council, as is currently the case. The rationale for the change is based on an evolution from the three kinds of rates currently charged (metered spaces, surface lots, parking structures) to a more complex system with several kinds of rates that could change dynamically based on time of day and geographic area
• DDA direction of enforcement: The DDA would provide direction to the city’s community standards division on some minimum number of hours in specific regions of enforcement.
• Payment: Instead of using the metaphor of “rent,” the DDA would pay the city a fixed percentage of the gross revenue from the parking system. The basic percentage that had been discussed by the committees was 17.5%. At Wednesday’s meeting the percentage of gross figure for the first two years of the proposed contract, FY 2012 and FY 2013, had been reduced to 16%, with 17.5% stipulated for the following eight years. Hewitt described the rationale as based in part on the desire of the city to mitigate against revenue loss for parking fines as compliance increases. As compliance increases, the thinking is that revenue will increase, and the city would share in the increase. Hewitt also said that there would be less inclination on the part of the city to come back to the DDA in the future to discuss the contract – there is an acceleration of payment built into the agreement.

Mutually Beneficial: Parking District

At the most recent meeting of the city and DDA’s “mutually beneficial” committees on Nov. 22, Amber Miller – the DDA’s planning and research specialist – had presented a methodology for creating a possible parking district that could define where the DDA manages parking in the city. At Wednesday’s DDA board meeting, Hewitt described Miller’s presentation as a scientific approach rather than an emotional one. At the Nov. 22 meeting of the committees, here’s the approach Miller took. The starting point was the DDA tax district:

Outlined and shaded red: DDA tax district.

The DDA manages parking meters and structures outside the tax district, so the next step was to add all the areas to the map where the DDA manages parking:

Outlined and shaded red: DDA tax district. Heavy bright red: DDA-managed parking facilities.

Miller took the maximum distance between the tax district and DDA-managed parking, 3,300 feet, and generated a 3,300-foot buffer around the entire DDA tax district as a way of describing a maximum parking district:

Inner outlined and shaded red: DDA tax district. Heavy bright red: DDA-managed parking facilities. Outer outlined and shaded red: Maximum parking district.

Starting with the maximum district, Miller then began a process of chiseling away, based on considerations like streets with residential parking permit programs, but preserving areas with primarily non-residential uses.

Inner outlined and shaded red: DDA tax district. Outer outlined and shaded red: Maximum parking district. White: Streets with residential parking permit programs. Blue: Streets with primarily non-residential uses. Orange: One possible resulting parking district.

Miller also considered current residential land use and the University of Michigan in producing one possibility for a DDA-managed parking district:

Shaded red: DDA tax district. Outlined and shaded green: Possible DDA-managed parking district.

Images in this article are not Miller’s originals. They were generated from GIS shape files provided by Miller to The Chronicle and converted by The Chronicle to .kml files at GeoCommons.com. The .kml files were then opened in Google Earth to create the images. Here’s a list of the .kml files:

• DDA tax district
• 3,300-foot buffer around DDA tax district
• Streets with primarily non-residential uses
• DDA-managed parking locations
• Streets with residential parking permit programs
• Possible DDA parking district
• Current land use
• University of Michigan property

Mutually Beneficial: Board Discussion

Bob Guenzel led off the board discussion by getting clarification from Roger Hewitt that the DDA development of downtown surface lots was not proposed to be a part of the parking contract.

Gary Boren began the more substantive discussion by alluding to the two different views that Hewitt had sketched out, saying that he took a more legalistic, contractual view rather than a political view of the situation. Boren expressed some frustration that the $2 million the DDA had authorized for payment to the city in the previous year – money that was not required to be paid under terms of the current contract – was being talked about as if it were ancient history, with the focus now only on the next four years. The DDA, he said, needs to be able to rely on promises from the city.

Boren noted that if the DDA’s mission is political, then that mission is all about the downtown. And he would thus consider a politically-based agreement only if it is mission-based. Boren questioned why profit from the parking system should go to the city’s general fund. Merchants, he said, could fairly ask: What’s in it for me? Boren pointed to the fact that the city and DDA have a monopoly on parking, and suggested that the transportation demand management strategy amounted to a way of maximizing revenues, making parking fees effectively a tax on downtown merchants.

Leah Gunn began by saying she disagreed with Boren. The city, she said, had supported the downtown through the development of the new downtown plan and the A2D2 rezoning initiative. She noted that she is the longest-serving member of the DDA board and recalled a time when the DDA did not receive revenue from the parking meters. When Ingrid Sheldon had been mayor, she said, Sheldon had been resistant to the idea. However, John Hieftje had been more receptive to the idea of the DDA collecting parking meter revenue.

The downtown, Gunn said, is more than merchants and downtown residents – it’s also all of us. She said it is important to give the city credit for cooperating with the DDA and that it’s not fair to say that the city council hasn’t created a mission for the downtown.

Newcombe Clark pointed out that the excess revenue from the parking system is, in fact, a tax. That is why, he continued, he felt he did not want the DDA board, with its appointed, not elected members, to have anything to do with it – it should go to the city. Clark expressed concern that the transportation demand management strategy of raising rates on surface lots to encourage people to park in structures could be affected by the fact that the DDA was simultaneously seeking to help the city develop those lots.

Clark said he is concerned about an expectation on the city’s part that it would be held harmless if parking system revenues declined, due to development of surface parking for other uses. He sought to negate Gunn’s point about meter revenues, saying that there is not a lot of net from the meter revenues.

Clark noted that last year, when the DDA decided to authorize an additional $2 million payment not required by the current contract, the DDA had explicitly decided not to give the city help in the form of a grant, but rather had acted on the advice of its legal counsel to move to a contractual approach. [See Chronicle coverage: "DDA OKs $2 Million Over Strong Dissent"] Clark said he was interested in finding a way to convey excess money to the city of Ann Arbor because it’s not appropriate for the DDA to administer the excess revenue.

Hiefte expressed skepticism about the idea that parking fees could be construed as a tax. He also questioned whether merchants had more ownership of downtown than other citizens.

Keith Orr appealed to the reason that DDAs exist: A strong downtown is good for the city. But he said the converse is also true. Orr drew an analogy between the current city-DDA conversation and the re-opening of a union contract, saying that he’s a card-carrying union member. He said that in a collective bargaining negotiation, there would be two basic points the union would make: (1) Show us your finances, and (2) What’s in it for us?

Orr reiterated a point he’s made before – that he thinks the “mutually beneficial” committees were mis-named. They should be more appropriately called the “shared sacrifice” committees, he said, and they need to find a way to make it a shared sacrifice. With respect to the specific numbers, he said he thinks that a 17.5% of gross payment is perhaps on the high side, but not egregiously so. However, he continued, in the context of re-opening the contract, the 17.5% figure was very high. Orr suggested that something like 13-14% might be more appropriate in terms of a shared sacrifice. When the Ann Arbor housing commission or Avalon Housing comes to the DDA to ask for a grant, Orr said, he wanted the DDA to have funds available. [It was a reference to a recent request from the housing commission to fund improvements for Baker Commons.]

Boren responded to Hieftje’s remarks by noting that a merchant selling shoes downtown is competing with stores outside of downtown that have free and easy parking. So parking ease and rates affect the revenues that merchants in the downtown are able to capture, he said. Further, in an allusion to the precedent-setting Bolt v. City of Lansing case, he noted that whether the purpose of a charge is to generate revenue as opposed to regulate use helps to define the difference between a fee and a tax.

John Mouat, noting the implicit link between the DDA’s ratification of a new parking contract and the DDA’s taking greater responsibility for developing downtown surface parking lots, wondered if the additional responsibility is really a “benefit” worth paying for. Mouat expressed some uncertainty about establishing of a parking district.

Russ Collins responded to some of Mouat’s concerns about the significance of a parking district, saying that there is not a lot of street parking to be added. The idea is not to define an area where the DDA would like to put meters, he said. The point is to provide clarity. Collins recognized that Hewitt had put in a lot of work in trying to move the discussion forward. Collins agreed with Orr that there should be shared sacrifice.

Board chair Joan Lowenstein stated that she felt the proposal would be a good framework for the board’s January retreat.

Bob Guenzel characterized himself as “the new kid on the block” – the recently retired Washtenaw County administrator is the newest appointee to the board, joining it in September. He said he had a lot of respect for the two partners in the discussion – the DDA and the city of Ann Arbor. His role was essentially a fiduciary one, he said. A central question he identified was: What really is a fair rent for the city’s parking system assets? Guenzel said the real issue for him was long-term certainty on both sides.

Hieftje came back to the question of why DDAs were created, noting that it was one mechanism for cities to compete against townships. He stated that it’s an extraordinary time. He also stated that the city’s community standards officers had indicated a willingness to be ambassadors and to retrain. He emphasized that the DDA budget is not static – it will increase with the addition of more development in the downtown area, citing specifically Zaragon Place II, which was recently approved, and 601 S. Forest, for which the developer has started pulling necessary permits.

Boren wrapped up the discussion by striking a conciliatory chord, saying that he could get pretty passionate, but he’d always trusted the integrity of those involved and believed that everyone was working for the benefit of the community, even if there were things on which they disagreed.

Communications and Committee Reports

The DDA board meetings typically include reports from its various subcommittees, as well as a report from Ray Detter, on behalf of the downtown citizens advisory council.

Comm/Comm: Downtown Citizens Advisory Council

Ray Detter reported that the December meeting of the downtown citizens advisory council was held in the spirit of a holiday gathering with food and drink provided. It was an occasion to review the goals of the advisory council for 2011. He reported that they had been a supporter of the 1992 downtown plan as well as the revised downtown plan approved in the summer of 2009. The advisory council supported the A2D2 rezoning initiative, as well as the design guidelines that are currently in the last phase of development. They support increased density in the downtown area and mixed use development of the Library Lot, Detter reported. The advisory council has a commitment to downtown greenspace, including support for the Allen Creek greenway.

Detter reported that the advisory council is delighted with the recent reconstruction of parts of West Park, which he said some members had suggested be renamed “Central Park West.” Detter also conveyed support for the preservation of the millrace and the pond at Argo, saying that it would only take him five minutes to drop a fishing line in the pond, starting from his downtown home. He allowed that he’d never caught anything, but said that the pond is a major amenity worth emphasizing. The advisory council supports alternative transportation, he said. Detter also expressed the group’s support for the street outreach task force that is taking a look at the panhandling issue in downtown Ann Arbor.

Comm/Comm: Transportation

Besides the resolution on Ypsilanti-Ann Arbor bus service enhancements, John Mouat reported from the transportation committee that the getDowntown Night Ride fare is increasing from $1 to $3. That reflects a reduction – from $4 to $2 – in the getDowntown subsidy to the regular $5 Night Ride fare. Mouat reported that there is some discussion of expanding the area of service for the subsidized Night Ride fares.

Mouat also reported that the latest progress on AATA’s Blake Transit Center (BTC) project has been outreach to Greyhound and the University of Michigan with the idea of bringing a broader range of transportation services to BTC and the Fourth Avenue block between Liberty and William streets.

Comm/Comm: Partnerships

The report  from co-chairs of the partnerships committee, Sandi Smith and Russ Collins, summarized the energy-saving grant program through the first two years: 73 energy audits have been completed and the DDA has paid $145,000 towards installation of energy-saving improvements in downtown buildings. A grant to XSeed in connection with a solar panel installation on the Michigan Theater, approved by the city’s historic district commission late this summer, will be contingent on an audit obtained through the energy grant program. At the partnerships committee meeting, when the issue was discussed, Collins – who is executive director of the Michigan Theater – left the room for the duration of the discussion, due to the potential conflict of interest.

There are two grants the partnerships committee is not recommending for approval at this time:  (1) an additional allocation to the Shelter Association of Washtenaw County for solar panels and computers, and (2) a grant to support Baker Commons, an Ann Arbor housing commission building located at the intersection of Packard and Main. The grant would be for a 50% match on $500,000, and would be used for window replacement, hallway carpet, and parking lot resurfacing.

Collins explained that the recommendation at this time against the Shelter Association and the housing commission grants was due to other commitments the DDA currently has. Collins repeated a sentiment that he’d expressed at the partnerships committee meeting when he said that given the nature of the mutually beneficial discussions currently taking place with the city of Ann Arbor, “it wouldn’t be illogical” to put the Baker Commons grant “into the hopper.”

Comm/Comm: Bricks and Money

Roger Hewitt gave the usual update on parking demand, saying that they were not seeing anything he’d characterize as a drop in demand. He reported that the DDA’s audit had given the DDA a clean bill of health, which identified a few technical issues that they’d taken care of. [.pdf of audit].

Hewitt also reported that the DDA had put out an RFP (request for proposals) for financial institutions at the request of a board member, but that they were planning to stay with the Bank of Ann Arbor for the next three years. It emerged that one reason the Bank of Ann Arbor gets the DDA’s business is this: It’s the only bank that can count in house all the coins from the parking meters. Russ Collins quipped that Tim Marshall has calluses on his fingers from all the coin counting – Marshall is president and CEO of the Bank of Ann Arbor.

Hewitt also reported that Mark Lyons, who is general manager for Republic Parking – the firm with which the DDA contracts for parking management – had identified $140,000 worth of savings he’d be able to make by adjusting labor and hours of operation.

John Splitt gave updates on the DDA’s construction projects. The tower crane has been constructed for the underground parking garage. Several concrete pours have taken place and were scheduled. The mass excavation is now 98% complete.

The Fifth and Division streetscape improvement projects are being winterized and work was wrapping up for the season on Friday. Before then, the wiring for the new streetlights would be complete – they were being “wired as we speak,” Splitt said.

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

Next board meeting: Noon on Wednesday, Jan. 5, 2011 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]