The two-year relocation will be made possible through a lease to be worked out with the Ann Arbor Downtown Development Authority. The DDA board authorized the signing of a lease at its May 7, 2014 meeting.

The lease would cost Greyhound $1,525 a month, which works out to $36,600 for the two-year period. Buses would not pull into the structure, but would stage on Fourth Avenue. Currently Ann Arbor Area Transportation Authority buses are using the west side of Fourth Avenue for staging. But in the next few weeks, when the new Blake Transit Center driveway is poured – which runs between Fourth and Fifth avenues – AAATA buses will no longer need the west side of Fourth Avenue for staging.

The lease by the DDA to Greyhound would include about 400 square feet of office space in the structure, which would be finished out by the DDA for Greyhound. The first year of rent is anticipated to cover the cost of the build out. The lease rate was described at the meeting as at the top of the market – especially considering that the space is located under a speed ramp for exiting the parking structure.

The DDA operates the public parking system on behalf of the city of Ann Arbor using city-owned structures, under a contract with the city of Ann Arbor. The DDA board discussion included reference to the fact that the DDA would ensure that all requirements of the city parking contract would be satisfied in reaching the lease agreement with Greyhound.

The clause in the contract on which the DDA will apparently rely is this one: “The DDA shall have the right to allocate portions of facilities to third party for long term parking usage and mutually agreed upon non-parking-related usage. The DDA shall provide an annual report to the City of any allocation identifying the specific facility and the size, nature and term of the allocation.” A traffic control order will need to be obtained from the city to allow the staging of buses in the public right-of-way.

The historic sign that is a feature of Greyhound’s current location will not be moved to the Fourth Avenue site.

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

Roger Hewitt, DDA board treasurer. (Photos by the writer.)

The proposed budget shows $19.3 million in revenues from the public parking system and $4.8 million in tax increment finance capture. Overall, it shows $24,237,186 in revenues against $26,531,972 in expenses. The use of fund balance to cover the difference leaves the DDA with an estimated fund balance at the end of FY 2015 of about $3.3 million. FY 2015 runs from July 1, 2014 through June 30, 2015. [FY 2015 DDA budget breakdown]

The expenses include $353,344 in salaries and $245,894 in fringe benefits for four staff members, $7,075,571 in payments to Republic Parking for management of the public parking system, and $2.1 million for parking facility maintenance. Accounting for $3.19 million of the expenses is a payment made to the city of Ann Arbor, equal to 17% of the gross revenues to the public parking system.

Included in the budget is a $200,000 grant to the Ann Arbor Housing Commission – as part of a $600,000 request from AAHAC to support improvements to Baker Commons and Miller Manor.

The budget also includes $676,000 for support of the getDowntown program. The board also approved a resolution that pledged to work toward maintaining or increasing the DDA’s support for transportation programs. That resolution came in the context of an approaching May 6, 2014 transit millage ballot question. The 0.7 mill tax was placed on a May 6 ballot by the Ann Arbor Area Transportation Authority board on Feb. 20, 2014. The tax would be levied by the AAATA only if it wins a majority of support among voters across its three member jurisdictions: the city of Ann Arbor, the city of Ypsilanti and Ypsilanti Township. The DDA board resolution came in part as a response to the fact that the DDA will be capturing a portion of the new millage under its tax increment finance (TIF) funding mechanism.

The board also approved the award to Republic Parking of the full $50,000 annual discretionary management incentive. Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 annual management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. It was last year, at the board’s March 6, 2013 meeting, when the DDA board decided for the first time in five years to award the full $50,000 of the incentive. The year before, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.

The board also heard the usual range of reports from committees as well as public commentary. A highlight of announcements included the upcoming closure of the surface parking facility at the old Y lot, as the city-owned property is sold to hotelier Dennis Dahlmann. The closing is expected sometime between March 13-15. The lot is located on William Street between Fourth and Fifth avenues, across from the downtown library and south of the Blake Transit Center.

FY 2015 Budget

The board considered a resolution to submit its FY 2015 budget to the city council for approval. The 2015 fiscal year starts July 1, 2014.

The proposed budget shows $19.3 million in revenues from the public parking system and $4.8 million in tax increment finance capture. Overall, it shows $24,237,186 in revenues against $26,531,972 in expenses. The use of fund balance to cover the difference leaves the DDA with an estimated fund balance at the end of FY 2015 of about $3.3 million. FY 2015 runs from July 1, 2014 through June 30, 2015. [FY 2015 DDA budget breakdown]

The expenses include $353,344 in salaries and $245,894 in fringe benefits for four staff members, $7,075,571 in payments to Republic Parking for management of the public parking system, and $2.1 million for parking facility maintenance. Accounting for $3.19 million of the expenses is a payment made to the city of Ann Arbor, equal to 17% of the gross revenues to the public parking system.

The budget also includes $676,000 for support of the getDowntown program, as well as $300,000 in discretionary spending from parking revenues. Included in the budget is a $200,000 grant to the Ann Arbor Housing Commission – as part of a $600,000 request from AAHAC to support improvements to Baker Commons and Miller Manor.

The budget also includes $449,500 for a down payment on a possible elevator replacement at the southwest corner of the parking structure at Fourth & William, as well as possible debt payments on that project.

In taking the step first to submit the budget for approval by the city council, the DDA board is this year following the state’s enabling legislation for downtown development authorities: “Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality.” In this case, the governing body is the Ann Arbor city council.

This is the first time in several years that the statutory procedure has been followed from the start. Last year, the DDA board first voted at its Feb. 6, 2013 meeting to adopt its FY 2014 budget (for the current fiscal year). That came in advance of the city council’s approval on May 20, 2013 of the city’s FY 2014 budget, which includes the DDA as a component unit.

The pattern followed last year – adoption by the DDA board of its budget in advance of the city council’s approval – had been the prevailing custom for several years. But the council decided at its May 20, 2013 meeting to revise the DDA’s budget in a way that made it significantly different from the one the DDA board had approved three months earlier. In addition to recognizing an additional $568,000 in tax increment finance revenue (TIF), the council’s action transferred an additional $300,000 from the DDA’s TIF fund to the DDA’s housing fund.

Then at the DDA board’s June 5, 2013 meeting, a vote was taken to re-adopt the FY 2014 budget that had been approved by the city council. The council’s $300,000 transfer from the TIF fund into the housing fund was echoed in the revision the council made on Nov. 18, 2013 last year to the local law regulating the Ann Arbor DDA. The following passage was added:

Tax increment financing seed funds for the Housing Fund shall be budgeted effective tax year 2016 at an amount no less than $300,000. Every year thereafter the minimum amount budgeted shall be adjusted at the same rate of increase as the increase in the total TIF capture. …

The 2016 tax year corresponds to the 2017 fiscal year. So the $300,000 figure is not required by law for another two years. At the March 5, 2014 board meeting, however, the budget was amended to add $100,000 to the housing fund expenditure line, at the request of board member Bob Guenzel. He’s long championed the cause of affordable housing and wanted to give the board some additional flexibility to spend additional money on that area, without making a mid-year budget change. Such a mid-year change would, based on remarks at the meeting, require city council approval.

In addition to the $200,000 grant to the AAHC, other housing fund expenditures for FY 2015 include $75,000 for a housing needs assessment.

FY 2015 Budget: Board Discussion

Roger Hewitt, the DDA board treasurer, noted that the operations committee had met the previous week, before the continued board retreat. The committee had come up with a budget proposal for the upcoming fiscal year. The fiscal year runs from July 1 through June 30 each year. Based on the board’s discussion at the retreat, he and DDA executive director Susan Pollay, deputy director Joe Morehouse, and board vice chair John Mouat had frantically crunched some numbers, Hewitt said, trying to figure out how to incorporate the board’s ideas from the retreat into the upcoming budget.

DDA board member Russ Collins, who is executive director of the Michigan Theater. In the foreground is board member Al McWilliams.

Hewitt noted that some of the ideas would not be incorporated because the timeframe for design and construction would probably not fall within the next fiscal year.

Some capital funds were removed but enough for design and engineering was left to continue with the streetscape effort, Hewitt said. He noted that the budget was formatted according to the requirements of the city of Ann Arbor. [Considerable confusion unfolded subsequently about apparent mismatches between the totals shown in the two versions. The board's review of the budget was based on the kind of breakdown the board has historically used for its budget planning.] Hewitt then reviewed the more detailed breakdown – which is a version that the board has used historically to set its budget.

In addition to the standard budget elements, Hewitt ticked through several other highlights. He indicated that a $114,000 item was a marketing expense including some pedestrian counts and some discretionary funds. He noted that no money has yet been approved for that purpose but these were issues identified at the retreat.

Capital expenditures had been reduced a bit from the initial draft budget – because Hewitt felt it was going to be hard to get everything up and running and under construction for some planned sidewalk construction within one fiscal year. So the board is waiting on the sidewalks until the streetscape framework plan is done, Hewitt said. He indicated that the board wanted to get the results of the streetscape framework study – which would be completed by the end of this year – and then prioritize which sidewalk work should be done first. [The board authorized a $200,000 contract for development of a streetscape framework plan at its Nov. 6, 2013 meeting.]

For bonds and interest payments, Hewitt continued, those figures have been bumped up with the intention of doing the project on the Fourth & William parking structure – to replace the stairway and elevator tower as well as to undertake some pedestrian improvements on that structure. Hewitt noted that the project has not yet been approved, but money is being included in the budget for both the down payment on the bond and increased bond payments.

FY 2015 Budget: Elevator Project

John Splitt described the elevator replacement project in somewhat more detail later in the meeting.

Image from preliminary drawings by the Carl Walker design team for renovated southwest elevator and stair tower for the Fourth & William parking structure.

In addition to replacing the elevator and stairway tower, the board is considering doing some work on the south and east sides, using some surfaces that are more reflective and perhaps installing some awnings. The stairway and elevator towers would be glass-enclosed and would open up things significantly, he said. The design team from Carl Walker had been invited back to the next operations committee meeting this month, Splitt reported. He said the committee was expecting to see a more detailed schematic design with proposals on phasing of construction at its next meeting. He was not sure if the presentation would be ready at the April meeting of the full board – but he hoped so.

Mouat added that the current undertaking really is looking at a kind of a “master plan” for renovations to the structure and how they might be phased over time. Splitt ventured that the Fourth & William parking garage had at least 30 years – or possibly 50 – of life left in it. And he did not think it should live out the rest of its life with the current elevator and stair tower.

The project is estimated to cost on the order of $3 million, depending on whether it’s eventually approved by the board and the scope and staging of the improvements (which could include exterior cladding, awnings, and electronic real-time information signs for bus arrivals). Very preliminary drawings were provided to the DDA’s operations committee at its Feb. 26 meeting. That preliminary work was authorized by the DDA board at its Jan. 8, 2014 meeting. The team from Carl Walker Inc. will follow up with more detailed drawings and cost estimates for various options.

FY 2015 Budget: Housing

Roger Hewitt said that $200,000 would be transferred into the housing fund, with the intention of spending approximately $275,000 – including $200,000 as a grant to the Ann Arbor Housing Commission and $75,000 on a housing needs assessment. Hewitt noted that the housing fund balance from the previous year was anticipated at nearly $400,000, so there would be enough money to cover that.

DDA board member Bob Guenzel.

Later in the meeting, reporting out from the partnerships committee, Bob Guenzel reviewed the Ann Arbor Housing Commission’s grant request made to the DDA’s partnerships committee. The request had come from AAHC executive director Jennifer Hall. Guenzel ventured that most DDA board members were aware that the AAHC had made a request of $600,000 to support improvements to AAHC’s Baker Commons and Miller Manor. At the most recent partnerships meeting, Hall had presented additional financial information, he reported. A lot of the focus of the discussion had been on the timing of the payments from the DDA, Guenzel said. Hall had indicated it could be done over three fiscal years – $200,000 per year. No final action had been taken, Guenzel reported, and discussion would continue.

Some back-and-forth among board members unfolded as Guenzel expressed an interest in adding $100,000 in discretionary spending for the housing fund. He indicated that he was not aware of a specific grant request that would tap that money, but he felt it might be useful to go ahead and budget the money to avoid the need for a midyear budget amendment. The back-and-forth between Guenzel and Hewitt indicated that the DDA board believes that such a midyear budget amendment would require approval of the Ann Arbor city council. The board agreed to add $100,000 to the housing fund’s expenditure line under discretionary spending.

FY 2015 Budget: Parking

Parking revenue is based on the current rate structure, Hewitt said. The “miscellaneous” item in the budget is money the DDA gets from the University of Michigan as part of the shared-use agreement for the Forest parking structure, Hewitt explained. He also highlighted the $3.19 million payment to the city of Ann Arbor, which is the 17% of gross revenues from the public parking system. That percentage payment is specified in the contract under which the DDA manages the parking system for the city.

Hewitt explained the difference between the “parking maintenance” line item and the “capital costs” line item in the parking maintenance fund. Parking maintenance is for relatively small items of less than $5,000 apiece. Capital costs are major repairs – like chipping out concrete and replacing it, putting new sealant on, or major painting jobs. These are the sorts of things that are needed in the parking structures to keep them in good shape, Hewitt explained. And the parking structures are in good shape because the DDA has been undertaking this kind of maintenance for a number of years, he said. It’s important to put enough money into the structures to maintain them so that they can live out their entire expected useful life, Hewitt said.

Hewitt noted that the FY 2015 budget reflects a deficit in the parking and the parking maintenance funds. But there are sufficient reserves in those funds to cover that gap, he added. Hewitt floated the possibility of increasing parking rates in the future. “Down the road we may – we are undoubtedly going to have to start looking at some at least inflationary increases in parking rates to cover our costs,” he said.

The total fund balance across all funds, Hewitt concluded, is about $3.3 million. That’s approximately 14% of expenditures, he said. Ideally, the DDA would like to be in the 18-20% range. But Hewitt called 14% reasonable, given that the major construction project of the Library Lane underground parking structure had been completed and the desire of the DDA to maintain some kind of momentum going into the future.

Board member Rishi Narayan asked if the percentage of operating expenses that should be held in reserve was evaluated across all funds or by each fund. Some back-and-forth between Hewitt and DDA deputy director Joe Morehouse established that the auditor looks at fund balances in each individual fund.

Morehouse was also called on to explain the difference between fiscal year and tax year in the context of a new ordinance requirement, approved by the city council late last year, that the DDA budget a minimum of $300,000 per year for the housing fund. The ordinance refers to tax year 2016, which corresponds to fiscal year 2017, Morehouse explained. [The assessor assesses values on Dec. 31 of a particular year. That sets the basis for the taxes collected the following July, which is the next fiscal year.]

FY 2015 Budget: Transportation

In reviewing the budget, Hewitt also noted that the alternative transportation line item of $676,000 is for the go!pass program, which has not yet been approved.

Reporting out from the operations committee, Keith Orr reviewed the getDowntown program’s funding request. The operations committee had some questions and had asked getDowntown director Nancy Shore to break down some of the categories of requests into more specific items. Shore was going to return for the March committee meeting so that the funding request can be considered at the next DDA board meeting in April.

That budget includes enough to cover a transportation funding request for the AAATA’s getDowntown program, which the board will consider at its April meeting. The bulk of DDA’s getDowntown funding supports the go!pass, a program in which downtown employers can participate to allow employees to take unlimited bus rides at no cost to the employee. Employers pay $10 per employee per year for the passes. An “all-in” clause requires employers to purchase go!passes for all employees.

The fares for rides taken with a go!pass are covered in smaller part by the employer payment and in larger part by an annual grant from the DDA. The total grant request this year reflects an 11% increase from last year:

                         FY 2014    FY 2015
getDowntown             $ 40,488   $ 43,000
go!pass                 $479,000   $529,000
Transportation Options  $ 91,174   $105,264
TOTAL                   $610,662   $677,264

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The board is expected to vote on the go!pass request at its April board meeting.

Outcome: The council unanimously approved submission of its FY 2015 budget to the city council for approval.

Transportation Resolution

The board considered a resolution that pledged to work toward increasing the DDA’s support for transportation programs.

The resolution came in the context of an approaching May 6, 2014 transit millage ballot question. The 0.7 mill tax was placed on a May 6 ballot by the Ann Arbor Area Transportation Authority board on Feb. 20, 2014. The tax would be levied by the AAATA only if it wins a majority of support among voters across its three member jurisdictions: the city of Ann Arbor, the city of Ypsilanti and Ypsilanti Township.

The DDA board resolution came in part as a response to the fact that the DDA will be capturing a portion of the new millage under its tax increment finance (TIF) funding mechanism. The ballot language itself highlights DDA tax capture among other TIF authority capture:

PUBLIC TRANSPORTATION IMPROVEMENT MILLAGE

To improve public bus, van, and paratransit services – including expanded service hours, routes, destinations, and services for seniors and people who have disabilities – shall the Ann Arbor Area Transportation Authority levy a new annual tax of 0.7 mills ($0.70 per $1,000 of taxable value) on all taxable property within the City of Ann Arbor, the City of Ypsilanti, and the Charter Township of Ypsilanti for the years 2014-2018 inclusive? The estimate of revenue if this millage is approved is $4,368,847.00 for 2014. This revenue will be disbursed to the Ann Arbor Area Transportation Authority and, as required by law, a portion may be subject to capture by the downtown development authorities of the Cities of Ann Arbor and Ypsilanti, the Washtenaw County Brownfield Redevelopment Authority, and the local development finance authority of the Charter Township of Ypsilanti.

The city of Ann Arbor’s financial staff are currently projecting the DDA’s TIF revenue for fiscal year 2015 to be about $4.8 million. Given the roughly 28 mills of tax on which the DDA captures taxes, that works out to a 0.7 mill equivalent of $120,000 (4,800,000/28)*0.7=120,000]. That’s consistent with the AAATA’s estimates of about $119,000 that would be captured from the 0.7 mill transit tax by the Ann Arbor DDA.

The DDA “resolved” clause of the resolution as amended at the meeting read:

Resolved, If the voters support approval of a new five-year transit millage, the DDA, which has been a long-time supporter of transit as a key strategy to meet its mission, will work to maintain or increase its support for transportation-related programs and projects.

Transportation: Public Commentary

Martha Valadez spoke to the board on behalf of Partners for Transit during public commentary at the start of the meeting, reminding the board that she’d also spoken at board’s Feb. 5, 2014 meeting. She was there to tell the board about the importance of the campaign to support the Ann Arbor Area Transportation Authority’s millage proposal, saying she hoped to get the DDA’s support for the millage proposal that will be on the May 6 ballot. She reviewed how the millage would be 0.7 mills for taxpayers in the city of Ann Arbor, the city of Ypsilanti and Ypsilanti Township. [For detailed background, see "Tax Question Focus of Transit Board Meeting."]

Valadez talked about how one of the goals of the millage is to create a better connected urban core in Washtenaw County. She described how the volunteers who are working on the campaign are very committed to the work that they are doing, saying that the increased service would change a lot of people’s lives. She described how a volunteer at a meeting the previous night who lived in Ypsilanti Township would be able to work more hours in Ann Arbor and not have to worry about getting home late in the evening. She asked for the DDA board’s support for the five-year plan that this millage would support. She asked for the board to endorse the millage proposal or for individual board members to make endorsements on behalf of their businesses. She offered to set up appointments one-on-one with board members after the meeting to talk about the millage.

Ray Detter reported out from the previous night’s downtown area citizens advisory council meeting, saying that the CAC would support voter approval on May 6, 2014 of the Ann Arbor Area Transportation Authority’s request for a 0.7 mill tax to improve transportation service. The five-year service improvement plan, Detter continued, would provide an additional 90,000 service hours for the greater Ann Arbor area.

Transportation: Board Discussion

Keith Orr introduced the item by saying that it was largely in response to the fact that a millage was being proposed by the Ann Arbor Area Transportation Authority. The last two “whereas” clauses are important, he said, because those clauses note that the DDA has a keen interest in supporting transportation:

Whereas, The Ann Arbor DDA has a keen interest in using these new millage funds for transportation-related purposes in support of the DDA’s Renewal Plan;

Whereas, These purposes may include and are not limited to such projects and programs as a future downtown circulator, repairs and enhancements to bus stops and bus shelters, the connector, bicycle facilities including bicycle parking, and other transportation-related facilities and services;

Orr explained that a certain portion of the new millage would be captured by the DDA. The resolution assures people that the DDA’s dedication to transportation would continue, he said, “recognizing that additional revenues would be coming our way.”

Russ Collins asked: “Why are we working to increase?” He ventured that the purpose of the resolution was to assure voters that the DDA would sustain its commitment, and that the DDA would not be withdrawing any funding. Orr responded to Collins by saying that about $90,000 of tax capture would come to the DDA – which he said coincidently was about the amount of support that the DDA had contributed to the LINK.

[The AAATA is estimating the DDA's capture of the millage at about $119,000. The city of Ann Arbor’s financial staff are currently projecting the DDA’s TIF revenue for fiscal year 2015 to be about $4.8 million. Given the roughly 28 mills of tax on which the DDA captures taxes, that works out to a 0.7 mill equivalent of $120,000 (4,800,000/28)*0.7=120,000], which is consistent with the AAATA’s estimate.]

By way of additional background, the DDA ended its support of the downtown circulator called the LINK in 2009 at its June 3, 2009 meeting. A breakdown of the cost of service funding for the LINK circulator from September 2008 to April 2009 was as follows:

$145,385  University of Michigan
$131,267  State operating assistance
$ 10,000  AAATA advertising revenues
$ 71,023  AAATA operating subsidy
$ 71,023  Downtown Development Authority

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Orr stressed that the resolution was not a quid pro quo – that if the voters approve the millage that the DDA would undertake a particular action.

City administrator Steve Powers, who also serves on the DDA board.

Rather, Orr explained, the resolution was to make clear that the DDA understood that if voters passed the millage, then their expectation was that the millage would be used on transportation. John Mouat said Collins’ point was a good one, wondering if the DDA should commit to an increase.

The back-and-forth that ensued resulted ultimately in the addition of “maintaining” as an option along with increasing support.

City administrator Steve Powers indicated that the resolution was consistent with what the DDA has done with other taxing jurisdictions as far as investing the DDA’s tax capture back into facilities.

It’s also consistent with the discussion that’s going on now in Lansing, Powers said, involving DDA reforms.

This is the direction that the DDA might be forced to go in any case by the legislature, Powers ventured. He described pending legislation in Lansing as “an active possibility.”

Outcome: The board unanimously approved the resolution on maintaining or increasing support for transportation.

Republic Parking Management Incentive

The board considered a resolution awarding Republic Parking the full $50,000 of its annual discretionary management incentive. Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 annual management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. [.pdf of DDA staff memo on Republic Parking management incentive]

It was last year, at the board’s March 6, 2013 meeting, when the DDA board decided for the first time in five years to award the full $50,000 of the incentive. The year before, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.

The direct costs for Republic Parking budgeted by the DDA for FY 2014 – the current fiscal year ending June 30 – are $6,569,316 out of about $19,348,016 in budgeted gross revenue for the parking system.

Part of the basis this year leading to the recommendation to award the full $50,000 was improvement in bi-monthly customer surveys over the year:

2013
5-Excellent 42.8%
4 31.6%
3 13.3%
2 3.3%
1-Poor 2.8%
Non-Responsive 6.2%

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The staff memo on the incentive notes that the DDA’s independent inspector’s cleanliness rates were 92.3% for the entire system, compared to 91.71% for last year.

The Dec. 31, 2013 accounts receivable balance for parking permit accounts was $22,920. That’s 4.4% of the average monthly billing, which is below the DDA’s target of 5%.

The memo also notes that the dead ticket average was 1.75% for the year, which is an increase from last year’s 1.01%. The target maximum for that statistic is 1.75%.

A staff memo accompanying the resolution awarding the $50,000 incentive cited additional factors:

• Completion and opening of the First and Washington parking structure, including overseeing the installation of equipment, managing final construction-related maintenance, coordination of opening operations with the final construction in the garage.
• Modernization of the parking equipment at two parking facilities.
• Completion of a Library Lane parking structure office.
• Implementation of reservation parking for Art Fair and the 1st NHL Winter Classic.
• Outstanding success with the first time events of New Year’s Eve “Puck Drops Here” and NHL Winter Classic, despite the weather obstacles presented.
• Maintaining of the parking facilities during the past extreme weather, which included removing large amounts of snow from the facilities and from parking meter areas in sub zero temperatures.

The Ann Arbor DDA manages the city’s public parking system under contract with the city of Ann Arbor. The contract calls for 17% of gross parking revenues to be paid to the city of Ann Arbor.

Republic Parking Management Incentive: Board Discussion

Roger Hewitt introduced the item by describing how the contract with Republic parking works: Republic’s costs are covered, but the contract also includes a management fee worth potentially $200,000 per year. Of that, $150,000 is guaranteed. The additional $50,000 can be awarded at the discretion of the board, based on performance. Hewitt directed everyone to the staff memo, which describes some of the objective and subjective criteria used for evaluating performance. Hewitt then reviewed the points of the memo in detail.

Hewitt noted that the surplus this past year was over $1 million, which he attributed in large part to the work of Republic Parking manager Art Low, working with new technology to make the operations as efficient as possible. Hewitt said he strongly endorsed awarding the full amount of the management incentive. “I cannot be happier with the job that Republic Parking has been doing on our system,” Hewitt said. He described Ann Arbor’s public parking system as one of the best maintained parking systems in the country.

Russ Collins added that a strict look at the statistics indicates that the parking system is generally on a very high level, and slightly above last year. Based on previous performance and current performance, Collins felt that the award of the full amount of the incentive was completely warranted.

Outcome: The board voted unanimously to award the full $50,000 management incentive to Republic Parking.

Communications, Committee Reports

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

Comm/Comm: Fifth & William Parking Lot

DDA executive director Susan Pollay announced that the Fifth & William parking lot (the former Y lot) would be closed starting sometime between March 13-15, 2014. That’s because the city-owned property is being sold to downtown hotelier Dennis Dahlmann. Pollay said it’s very exciting and the DDA is looking forward to the new project being built there.

By way of background, a project has yet to be submitted to the city, and will take several months to make its way through the approval process. The Ann Arbor city council approved a purchase agreement with Dahlmann for the city-owned land, for $5.25 million, at its Nov. 18, 2013 meeting. One of the terms of the agreement is that Dahlmann must complete construction and receive a certificate of occupancy for the project on the site by Jan. 1, 2018.

Dahlmann made a proposal for the DDA to lease the property from him for $150,000 a year – so that the DDA could continue to provide public parking spaces there until construction of Dahlmann’s project could begin. The response from DDA operations committee members on Jan. 29 was unenthusiastic. They felt it would provide an incentive for Dahlmann to delay developing the land. They also felt that in the immediate vicinity of that lot, there was adequate parking – at the Fourth & William and the Library Lane structures. Finally, the DDA had calculated that with the $150,000 rent payment to Dahlmann, the net annual income to the parking system – assuming all 141 spaces in use – would be just $12,333 a year. [.pdf of DDA financial analysis of Dahlmann's proposal]

Comm/Comm: 120 W. Huron Hotel

Reporting out from the partnerships committee, Bob Guenzel described a request from First Martin Corp. Mike Martin had attended the partnerships committee meeting to make a request on behalf of the 120 W. Huron project – which Guenzel ventured most people knew was for a hotel. Martin had made a specific request for a DDA grant to support project elements that benefit the public – streetscape, additional lighting, LEED certification, historic preservation of the bus facade.

The committee had decided to defer the request while it considers whether it should create a new DDA partnership grant policy that would support projects like this, Guenzel reported. Guenzel indicated that a draft policy would likely be considered at the next committee meeting. A brownfield grant policy that had previously been generated – in response to the 618 S. Main project – was circulated as a possible template to use for the new policy.

Comm/Comm: Footing Drain Lawsuit

Ray Detter reported out from the previous night’s downtown area citizens advisory council meeting. He reported how there had been discussion of the recently filed lawsuit against the city of Ann Arbor, which challenges the legal foundation of the city’s footing drain disconnection ordinance. He reviewed how the ordinance was enacted in 2001, which established a program under which property owners can be required to disconnect their footing drains from the sanitary sewer system. The intent of the ordinance, he continued, is to diminish the risk of sanitary sewer overflows into the Huron River and sanitary sewage backups in homeowners’ basements.

Detter pointed DDA board members to the Feb.28 Ann Arbor Chronicle coverage of the issue. [See "Lawsuit Filed on City Footing Drain Program."] Detter noted that a motion for a preliminary injunction had also been filed in connection with the lawsuit, asking the court to order the city to stop enforcement of the footing drain disconnection ordinance. Among the lawsuit’s many claims, Detter continued, is that it violates the U.S. Constitution. Detter called it a very serious lawsuit. If the preliminary injunction were granted, he contended, it would have the immediate effect on downtown development as well as the development plans of the University of Michigan.

Comm/Comm: Courthouse Square

Ray Detter also reported that the CAC supports age diversity in the downtown. Courthouse Square – an apartment building for senior citizens at the southwest corner of Huron and Fourth – has been sold to Wickfield Properties, he said. The CAC was urging Wickfield, the DDA, the city council, and the entire community to help support housing projects that can help further age diversity in central Ann Arbor. He ventured that it’s not known yet what will happen with Courthouse Square.

Comm/Comm: Connector Study

An alternatives analysis is currently being conducted by the AAATA for the corridor running from US-23 and Plymouth southward along Plymouth to State Street, then further south to I-94. The alternatives analysis phase will result in a preferred choice of transit mode (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops. The study has winnowed down options to six different route alignments.

Roger Hewitt reported out on the connector study, for which he serves on an advisory group. The group had reviewed some very preliminary cost estimates, and received a status report on the modeling project. The modeling project took a lot of demographic and transportation data to try to determine what ridership would be, based on placement of stations at different locations, Hewitt explained. It’s a very complex modeling that is used in the analysis, he said. The group is using the modeling techniques of the Washtenaw Area Area Transportation Study (WATS). The modeling project should be done by the middle of March, he said, and the information would be available by the end of March – as the group tried to determine what the final alignment of routes would look like. “We’re kind of slogging through the technical part now,” he concluded.

Comm/Comm: TiniLite

During public commentary at the end of the meeting, Changming Fan introduced himself as president of TiniLite World Inc., which been registered in Ann Arbor since 1996. He said he appreciated being in a democratic country and felt like he wanted to stand up and say something because he felt like he had the freedom to do that.

He told the board he was a graduate of the University of Michigan. He described himself as an entrepreneur and an inventor. He also said he loves the politics involved with public art and public safety. He wanted to contribute what he learned in China and at the University of Michigan to the city of Ann Arbor. He has developed the LED technology made by TiniLite since 1996, he said. There are a lot of things that we should do to make Ann Arbor be the best town it can be, he said. In 2005, Ann Arbor had become the first city to install LED streetlights. He said that Ann Arbor should continue that legacy by using LED lights to create art, using his technology. He wanted to make a positive impact in that way, he said.

Comm/Comm: Puddles

During public commentary at the conclusion of the meeting, Ed Vielmetti told the board he wanted to talk to them about snow. [He was reprising his remarks made at the Jan. 7, 2009 DDA board meeting.] He pointed out that there’s a lot of it and at some point it’s going to melt, and it would try to drain into the catch basins downtown. Some of the basins are currently blocked by snow and ice, he noted. There also are large and small piles of snow blocking pedestrian paths downtown. He said he’s tried to figure out who’s responsible for dealing with this issue and it’s hard to figure out. At that point DDA board member Russ Collins joked: “Engineers!”

Vielmetti said that sidewalk clearance is the responsibility of property owners, and clearing the street is the responsibility of the city. But Vielmetti said he wasn’t sure who is responsible for dealing with the puddles in the street that people have to walk around or not come downtown because it’s hard to cross the street. He thought that the DDA has a role in that.

As far as the narrow question of who should clear the catch basin, Vielmetti proposed that the DDA look into possibly partnering with the Huron River Watershed Council, which has an adopt-a-storm-drain program administered by Jason Frenzel. [Frenzel recruited volunteers for the program at last year's Green Fair.] Vielmetti described the HRWC’s program as for residential areas right now, but ventured that HRWC would be a point of contact for the DDA.

Vielmetti mentioned the intersection of Church Street and South University as one that had been bad in the past. It’s not a situation that can be looked at with pride, he said, and where we can say that all of Ann Arbor citizens can easily cross the street. He said he did not know who is responsible for it but he ventured that a better job can be done. And he figured that the dollar amounts involved would be small, compared to the benefit.

Comm/Comm: Public Art

In his report from the previous night’s downtown area citizens advisory council meeting, Ray Detter said the CAC wanted to state it supports continued efforts of the city – despite recent actions of the city council – or other groups and individuals to make sure that additional public art installations remain an important city goal.

Comm/Comm: Library Lot

Ray Detter also reported that the CAC reaffirmed its support for a public plaza, with a walkway to Liberty Plaza, as part of a plan to create tax-producing private development on a major part of surface of the Library Lane parking structure. The CAC also believes that any future private development should be pursued cooperatively, and should be integrated with an adjoining plaza, the Ann Arbor District Library, the Ann Arbor Area Transportation Authority and all nearby public and private spaces.

Comm/Comm: Welcome to New UM President

Ray Detter said the CAC wanted to welcome the new University of Michigan president Mark Schlissel to downtown Ann Arbor. He said the Schlissel family would be “inhabitants of Sloan Plaza.” His family would live there while the university president’s historic home on South University Avenue is being renovated.

Present: Al McWilliams, Bob Guenzel, Roger Hewitt, Steve Powers, John Splitt, Rishi Narayan, Russ Collins, Keith Orr, John Mouat.

Absent: Cyndi Clark, Joan Lowenstein, Sandi Smith.

Next board meeting: Noon on Wednesday, April 2, 2014, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date]

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Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 annual management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. [.pdf of DDA staff memo on Republic Parking management incentive]

It was last year, at the board’s March 6, 2013 meeting, when the DDA board decided for the first time in five years to award the full $50,000 of the incentive. The year before, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.

The direct costs for Republic Parking budgeted by the DDA for FY 2014 – the current fiscal year ending June 30 – are $6,569,316 out of about $19,348,016 in budgeted gross revenue for the parking system.

Part of the difference this year leading to the recommendation to award the full $50,000 was improvement in bi-monthly customer surveys over the year:

2013
5-Excellent 42.8%
4 31.6%
3 13.3%
2 3.3%
1-Poor 2.8%
Non-Responsive 6.2%

-

The staff memo on the incentive notes that the DDA’s independent inspector’s cleanliness rates were 92.3% for the entire system, compared to 91.71% for last year.

The Dec. 31, 2013 accounts receivable balance for parking permit accounts was $22,920. That’s 4.4% of the average monthly billing, which is below the DDA’s target of 5%.

The memo also notes that the dead ticket average was 1.75% for the year, which is an increase from last year’s 1.01%. The target maximum for that statistic is 1.75%.

A staff memo accompanying the resolution awarding the $50,000 incentive cited additional factors:

• Completion and opening of the First and Washington parking structure, including overseeing the installation of equipment, managing final construction-related maintenance, coordination of opening operations with the final construction in the garage.
• Modernization of the parking equipment at two parking facilities.
• Completion of a Library Lane parking structure office.
• Implementation of reservation parking for Art Fair and the 1st NHL Winter Classic.
• Outstanding success with the first time events of New Year’s Eve “Puck Drops Here” and NHL Winter Classic, despite the weather obstacles presented.
• Maintaining of the parking facilities during the past extreme weather, which included removing large amounts of snow from the facilities and from parking meter areas in sub zero temperatures.

The Ann Arbor DDA manages the city’s public parking system under contract with the city of Ann Arbor. The contract calls for 17% of gross parking revenues to be paid to the city of Ann Arbor.

This brief was filed from the Ann Arbor DDA offices located at 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings. A more detailed report will follow: [link]

The March 18, 2013 city council meeting did not adjourn until nearly 2 a.m. From left: Sabra Briere (Ward 1), Margie Teall (Ward 4) and city administrator Steve Powers. (Photos by the writer.)

The council decided to conduct a review of D1 zoning, without imposing a moratorium. That cleared the way to consider the 413 E. Huron project, which the council eventually voted to postpone – at roughly 1:30 a.m. Because of the amount of time spent on just those items, they’ll be included in a separate Chronicle report.

Apart from those two items, the council’s agenda still included a planning and land use focus, as well as a downtown theme. An additional theme was the city council’s relationship to two other public bodies – the city planning commission and the board of the Ann Arbor Downtown Development Authority.

In the case of the planning commission, the council for a second time balked at the commission’s recommendation of R3 (townhouse) zoning for a recently annexed parcel on Ellsworth near Stone School Road – planned as the site of Summit Townhomes, which would be a 24-unit development. The council postponed consideration of the Summit Townhomes site plan and the zoning, having previously postponed the zoning. The council also had previously referred the zoning recommendation back to the planning commission for re-review. The council’s second postponement on March 18 came after the commission’s re-affirmation of its original recommended R3 zoning. The council sent no explicit communication to the planning commission requesting action, beyond the implicit message of postponing the vote.

In the case of the DDA board, the council is weighing changes to the city ordinance governing the composition of that body, but postponed those changes for a second time at its March 18 meeting. The more significant of the ordinance changes involves clarifying how the Ann Arbor DDA’s tax increment finance capture is calculated, which has implications for millions of dollars for the DDA, the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library.

Also related to the DDA, early in the council’s meeting an oral report was given on a session of the council’s audit committee – held the previous week to review the DDA’s FY 2012 audit. In the middle portion of the council meeting, councilmembers postponed the ordinance changes. And in the early morning hours of March 19, after the voting agenda was concluded, a member of the audit committee – Sally Petersen (Ward 2) – announced her intention to propose a task force on the DDA.

Related to other boards and commissions, the council confirmed the appointment of a chair for the zoning board of appeals (ZBA): Alex Milshteyn. He replaces Carol Kuhnke, who resigned in December 2012 after being elected judge of the 22nd Circuit Court.

In other business, the council gave approval for the zoning and site plan of The Shoppes at 3600, a proposed retail development on Plymouth Road.

The council also voted to object to the renewal of a liquor license for The Arena, a downtown bar located at Division and Washington streets. The basis for the objection – which will be forwarded to the Michigan Liquor Control Commission for final action – was non-payment of taxes.

The council also gave initial approval to a revision to the city’s sign ordinance. It would essentially maintain current conditions, but provide for certain limited digital signs with a restricted range of changeable elements.

Council communications included a briefing on upcoming changes the council will be asked to consider for the city’s public art ordinance. In other communications, the council will be giving a fire station reconfiguration plan some additional explicit discussion at a future working session – although it appears that the idea has insufficient traction to move forward.

Public commentary at the meeting covered a range of topics, including a call for the council to waive privilege on legal advice that councilmembers had received on the D1 moratorium issue – because they’ve now voted not to enact the moratorium.

DDA-Related Issues

Items related to the Ann Arbor Downtown Development Authority came up at three points during the meeting. During council communications at the start of the meeting, Sumi Kailasapathy (Ward 1) – a member of the council’s audit committee – gave a report from the committee meeting held on March 14. Later, the council voted on DDA ordinance revisions that were on the agenda. And sometime around 1:30 a.m. the topic came up again, during the council communications at the end of the meeting.

This report begins with the agenda item.

DDA: Ordinance Revisions

Before the council for its consideration were several revisions to Chapter 7, a city ordinance governing the Ann Arbor Downtown Development Authority (DDA). The ordinance amendments had been postponed at the council’s March 4, 2013 meeting.

A chart by the city of Ann Arbor financial staff showing Ann Arbor DDA TIF (tax increment finance) revenue under various methods of calculation.

Among the revisions to Chapter 7 that are being considered by the council are: a new prohibition against elected officials serving on the DDA board; term limits on DDA board members; a new requirement that the DDA submit its annual report to the city in early January; and a requirement that all taxes captured by the DDA be spent on projects that directly benefit property in the DDA tax increment finance (TIF) district.

But most significant of the revisions would be those that clarify how the DDA’s TIF tax capture is calculated. The “increment” in a tax increment finance district refers to the difference between the initial value of a property and the value of a property after development. The Ann Arbor DDA captures the taxes – just on that initial increment – of some other taxing authorities in the district. Those are the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. For FY 2013, the DDA will capture roughly $3.9 million in taxes.

The proposed ordinance revision would clarify existing ordinance language, which includes a paragraph that appears to limit the amount of TIF that can be captured. The limit is defined relative to projections for the valuation of the increment in the TIF plan, which is a foundational document for the DDA.

If the actual rate of growth outpaces the growth rate that’s anticipated in the TIF plan, then at least half the excess amount is supposed to be redistributed to the other taxing authorities in the DDA district.

DDA board members at their March 6, 2013 meeting indicated that they did not think any reason had been given to amend the ordinance. At a meeting of the city council’s audit committee held on March 14, city CFO Tom Crawford indicated that it was the view of many people, including his own, that the ordinance language on TIF calculation was not clear. During that meeting of the audit committee, Crawford indicated that the FY 2012 audit of the DDA did not include a review of Chapter 7 compliance.

What the proposed ordinance revisions clarify is which estimates in the TIF plan are the standard of comparison – the “realistic” projections, not the “optimistic” or “pessimistic” estimates. However, the ordinance revisions as currently formulated do not clarify whether a “cumulative” method of performing the calculations should be used or if a year-to-year method should be used.

Use of the cumulative method has an impact on whether the redistribution of excess TIF is made on a one-time or recurring basis. Under the cumulative method, other taxing authorities in the Ann Arbor DDA TIF district would see a total on the order of $1 million in additional tax revenue, compared to the way the DDA currently calculates the TIF capture. The city of Ann Arbor’s annual share would be more than half of that amount, around $600,000.

Method: Year-to-Year                   
Refunds                                                         
       City       County      WCC       AADL      Total Ref    DDA TIF
FY14   $429,409   $149,392    $94,257   $40,163   $713,221     $3,964,457
FY15    $11,958     $4,160     $2,625    $1,118    $19,862     $4,774,758

===============================

Method: Cumulative                     
Refunds                                                      
       City       County     WCC        AADL      Total Ref    DDA TIF
FY14   $613,919   $213,583   $134,757   $57,421   $1,019,680   $3,657,998
FY15   $635,108   $211,673   $139,195   $58,539   $1,044,515   $3,773,043

-

The clarification of the ordinance crucially strikes two paragraphs related to bond and debt payments. One of the two paragraphs was key to the DDA’s current legal position – which is that no redistribution of TIF is required under the ordinance, given the DDA’s financial position. The DDA interprets the stricken paragraphs to mean that no redistribution to other taxing authorities needs to be made, until the total amount of the DDA’s debt payments falls below the amount of its TIF capture. At the DDA board’s March 6 meeting, board member Bob Guenzel alluded to this in the context of remarks on the TIF calculations when he observed that the DDA is “on the hook” for some bond payments.

In the FY 2014 budget, adopted by the DDA board at its Feb. 6, 2013 meeting, about $6.5 million is slated for bond payments and interest. That clearly exceeds the amount of anticipated TIF capture in the FY 2014 budget – about $3.9 million. The DDA is able to make those debt payments because about half of that $6.5 million is covered by revenues from the public parking system. The DDA administers the public parking system under contract with the city of Ann Arbor.

This issue first arose back in the spring of 2011. The context was the year-long hard negotiations between the DDA and the city over terms of a new contract under which the DDA would manage the city’s parking system. The Chapter 7 issue emerged just as the DDA board was set to vote on the parking system contract at its May 2, 2011 meeting.

When the issue was identified by the city’s financial staff, the DDA board postponed voting on the new contract. The period of the postponement was used to analyze whether the DDA’s Chapter 7 obligations could be met – at the same time the DDA was ratifying a new parking system contract, which required the DDA to pay the city of Ann Arbor 17% of gross parking revenues. The DDA manages the city’s parking system under contract with the city.

Initially, the DDA agreed that money was owed to other taxing authorities – not just for that year, but for previous years as well. And the DDA paid a combined roughly $473,000 to the Ann Arbor District Library, Washtenaw Community College and Washtenaw County in 2011. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess.

The Chronicle recently learned that during this timeframe in 2011, the TIF calculation topic was the subject of a meeting attended by representatives of all the taxing authorities in the DDA district, as well as by representatives of the DDA. The outcome of the meeting was an expectation by some in attendance that the DDA would work with the other taxing authorities to arrive at a consensus interpretation of the ordinance. But subsequently, the DDA completely reversed its legal position, and contended that no money should have been returned at all. That decision came at a July 27, 2011 DDA board meeting.

The following spring, during the May 21, 2012 city council budget deliberations, Stephen Kunselman (Ward 3) proposed an amendment to the city’s FY 2013 budget that stipulated specific interpretations of Chapter 7, with a recurring positive impact to the city of Ann Arbor’s general fund of about $200,000 a year. Kunselman wanted to use that general fund money to pay for additional firefighters. That year the budget amendment got support from just two other councilmembers: Jane Lumm (Ward 2) and Mike Anglin (Ward 5).

For a Chronicle op-ed on this topic, see: “Column: Let’s Get DDA TIF Capture Right.”

DDA: Ordinance Revisions – Council Deliberations

On March 18, Stephen Kunselman began deliberations on the ordinance amendments by indicating he’d be asking for an additional postponement. [The ordinance changes are sponsored by Kunselman and Sumi Kailasapathy.] One reason for postponing, he said, is that answers to certain questions are still being sought from the DDA. He also noted that there would be a council work session on the DDA budget. [This is now scheduled for March 25.] There’s a lot of concern about how the amendments he’s proposing would affect the DDA budget and its debt obligations. He wanted to reiterate that his goal was to bring some stability, trust and confidence in the DDA as an institution. His intent is that the DDA budget would remain whole.

Based on figures from the city treasurer’s office, Kunselman noted that using the year-to-year method to calculate the excess TIF capture, the city would receive $429,409 in FY 2014. The DDA’s total TIF capture would be $3.9 million for that year. But for the following year, FY 2015, the DDA’s total capture was anticipated to jump to $4.7 million. That’s due to recently completed projects within the geographic areas of the TIF district, which will increase the tax base.

But in the proposed two-year budget the DDA passed recently [at its Feb. 6, 2013 meeting], the anticipated total TIF capture by the DDA was $3.7 million in FY 2015. What had caught his attention was the $1 million increase between the approved budget amount and the projection for actual TIF capture, Kunselman said. So he wanted to have a good discussion about the cumulative method of calculating the excess TIF. Sample language for a further revision to the TIF ordinance – which would stipulate the cumulative method of calculation – had been forwarded to councilmembers, Kunselman said. The following revision would have the effect of clarifying that a cumulative method of calculation should be used [deleted text indicated with strike-through, and added text in italics]:

If the captured assessed valuation derived from new construction, and increase in value of property newly constructed or existing property improved subsequent thereto, grows at a rate faster is greater than that anticipated in the tax increment plan, at least 50% of such additional amounts shall be divided among the taxing units in relation to their proportion of the current tax levies. If the captured assessed valuation derived from new construction grows at a rate of over is greater than twice that anticipated in the plan, all of such excess amounts over twice that anticipated shall be divided among the taxing units.

Kunselman pointed out that under the cumulative calculations, the approved DDA budget of $3.7 million for FY 2015 could be covered as adopted. So that wouldn’t “hamstring” the DDA in its ability to pay its bills, Kunselman concluded.

Regarding the other amendments to the DDA ordinance that he’s proposing – involving membership, term limits and a report filing requirement – he reminded people that for many years the DDA didn’t file its annual report as required by state law. He pointed out that the state-enabling statute for DDAs contemplated the possibility that the DDA could enter into an agreement with the taxing jurisdictions whose taxes are captured – to share a portion of TIF revenues with one of the jurisdictions. How can you do that if an elected official of one of the taxing authorities is on the DDA board? Kunselman asked. He saw this as an ethical conflict.

Kunselman noted that last year, on Jan. 27, 2012, the Ann Arbor District Library sent a letter to the city, expressing the library’s disappointment that a method of TIF calculation was chosen that would return the smallest amount of TIF possible to the taxing jurisdictions whose taxes are captured by the DDA. Kunselman felt that if the method could be clearly specified in the ordinance, the concern of others can be relieved. Kunselman said he didn’t want to wind up in court with the other taxing authorities on the issue.

Kunselman indicated that he hoped councilmembers could take the initial vote on the proposed amendments at the council’s April 1 meeting.

Mayor John Hieftje expressed concern that the city’s general fund could see a negative impact as a result of the ordinance amendments.

Outcome: The council voted unanimously to postpone the question of revising the DDA ordinance until its April 1, 2013 meeting. Even if the council votes to approve any of the proposed amendments on April 1, a second and final vote would be required to enact the ordinance changes.

DDA: Council Communications – Audit Committee

Early in the meeting during council communications time, Sumi Kailasapathy (Ward 1) gave an update on the audit committee’s session held on March 14. She told the council that the meeting had to be called under Robert’s Rules by members of the committee – because the chair of the committee didn’t see a need for the meeting. By way of background, the chair of the committee is Margie Teall (Ward 4). Under Robert’s Rules – which govern all procedures of the council not otherwise addressed in the council’s own rules – a committee meeting can be called by the chair or by two of its members. In addition to Teall and Kailasapathy, other members of the committee include Stephen Kunselman (Ward 3), Chuck Warpehoski (Ward 5) and Sally Petersen (Ward 2).

Kailasapathy said that she and Kunselman had concerns about the TIF calculations and compliance by the DDA with Chapter 7 of the city’s ordinance. She quoted from the DDA TIF plan, which states that: “The DDA submits an annual audit to the City of Ann Arbor that includes the status of the (tax increment finance) TIF account in compliance with the requirements of Section 15(3) of the State of Michigan Downtown Development Authority Act.” Kailasapathy indicated that the result of the audit committee’s conversation was that compliance with TIF regulations was not tested during the FY 2012 audit. The question arose about why that compliance was not part of the audit’s scope, she said.

She went on to say that she and Kunselman had found mistakes in statements from the FY 2012 audit report, giving as an example what she called a “significant error”: a statement that parking bonds are serviced out of the DDA’s parking fund – when TIF funds are also used to service parking bonds.

Kailasapathy indicated a desire to meet with the auditors to discuss that and other statements – to determine if the report needs to be re-issued. She was also interested in understanding why Chapter 7 compliance is not tested as part of the audit procedure. She indicated she was “alarmed” at the delays in getting financial information from the DDA during the audit committee’s inquiry, which had been attributed to the fact that the DDA’s deputy director, Joe Morehouse – who is directly responsible for the DDA financial records – is on medical leave. Kailasapathy questioned why there was no succession plan to provide for his absence. She stated that the nature of her interest in the DDA was compliance with financial standards and was not about “us versus them.” Her remark about “us versus them” could be understood as an allusion to some of the discussion at the March 14 audit committee meeting.

On that occasion, Sally Petersen (Ward 2) had highlighted the portion of the FY 2012 that described the DDA’s relationship to the city: “The Authority is considered a component unit of the City of Ann Arbor, Michigan and is discretely presented in the City of Ann Arbor’s (the primary government) financial statements.” That had been a good reminder to Petersen that “them is us.”

Kailasapathy concluded her remarks during the early council communications by indicating that her interest is in compliance with legal requirements and fairness to the other taxing jurisdictions, whose taxes are captured through the DDA’s TIF.

DDA: Council Communications – TIF/Parking Fund

The FY 2012 audit report statement – which Kailasapathy referred to as inaccurate – was this:

The parking structure bonds are to be serviced with revenues from the parking fund. The City Hall bonds are to be serviced from future tax increment revenues of the general fund.

The use of not just parking revenue, but also TIF revenue, to pay for parking structure bonds also came up near the end of the meeting during council communications.

Christopher Taylor (Ward 3), alluding to the late hour, said he would like to make clear for that “one member of the public who’s still listening” that the TIF fund has been used for parking-related infrastructure for decades and that use of the TIF fund has been perfectly proper. He thought it was useful to state that fact going forward. The DDA is proud of what it does and, for his part, Taylor felt the DDA should be proud.

Kunselman took the opportunity to make clear that the actual issue at stake was not the use of TIF funds to service parking structure bonds per se, but rather the combination of that practice with a transfer of parking revenue to the city. Under the contract between the city and the DDA, the city receives 17% of public parking system gross revenues. Kunselman said that as he understood the state-enabling statute, a sharing of TIF revenues with one of the taxing jurisdictions required an agreement with the other jurisdictions. The part of Act 197 of 1975 to which Kunselman was referring reads as follows:

The authority may enter into agreements with the taxing jurisdictions and the governing body of the municipality in which the development area is located to share a portion of the captured assessed value of the district.

There’s no agreement among the city and the DDA or the other taxing authorities to share the DDA TIF, Kunselman pointed out. Yet through its parking fund, the DDA is providing money to the city – under the parking contract – and also to the Ann Arbor Transportation Authority, through grants to the getDowntown program. At the March 14 meeting of the council audit committee, Kunselman called this “TIF laundering.” This was “very questionable” in Kunselman’s mind. He noted that the way that DDAs operate is starting to catch the attention of the state legislature. [By way of background, HB 4459, if passed, would exclude from capture taxes levied under the state's enabling legislation on zoological authorities or art institute authorities.]

DDA: Background – TIF/Parking Fund

While Taylor’s characterization of the DDA’s historical use of TIF funds to invest in the city’s parking structures was accurate, much of that history predates the transfers of parking system revenues to the city, which began in earnest in 2005.

That’s the year the DDA agreed to transfer $1 million a year to the city for the next 10 years, with the possibility of transferring up to $2 million in any one year, so long as the total through 2015 did not exceed $10 million. With all $10 million paid in the first five years, the city sought to renegotiate the contract – resulting in an agreement ratified finally in May 2011, which now annually transfers 17% of gross public parking system revenues to the city of Ann Arbor.

The payments to the city from the parking system were made in the context of a consistent narrative, beginning at least around 2003 when the DDA’s TIF plan was renewed, around the notion of self-sufficiency for Ann Arbor’s public parking system. From the 2003 TIF plan:

In 2002, the DDA took over operation of the on-street parking meter system in order to meet the community’s goal of a self-sustaining downtown parking system. The DDA is now working to establish rates and policies that will ensure the long-term viability of the full system while serving the special needs of downtown stakeholders.

From the Nelson\Nygaard study of the Ann Arbor parking system completed in 2007:

The public parking system operations can and should be financially self-sustaining, with no need for tax subsidy.

From the DDA’s “Public Parking & Transportation Demand Management Strategies Plan,” written in April 2010:

The public parking system operations are now and should continue to be financially self-sustaining, with no need for tax subsidy. The users of the system should pay for the system, including operation, maintenance, repair, and eventual additions to the system.

And mayor John Hieftje campaigned for re-election in 2010 in part on a contention that the bonds to be issued for the new Library Lane underground parking garage would be serviced with parking system revenue, not with tax money. [See Chronicle coverage of candidate forums on July 10, 2010 and July 1, 2010.]

However, when the city council voted on Feb. 17, 2009, to approve issuance of the bonds for the new Library Lane underground parking structure, the staff memo had indicated that a combination of parking revenue and TIF capture would be used to pay the bonds:

Debt service on the bonds is expected to be paid from revenues of the City’s public parking system and tax increment revenues collected by the Downtown Development Authority.

From an accounting point of view, the DDA’s financial system was set up to reflect a commitment that all parking system expenses would be covered by parking system revenues. But that entailed allowing the parking fund to show a deficit – with the balance in the other DDA funds (including the TIF fund) keeping the DDA solvent in aggregate. However, deficit fund balances are counter to Michigan’s Uniform Budgeting and Accounting Act. And the result of the FY 2010 audit was that the DDA shifted away from that deficit-funding practice.

The required adjustment to the accounting, to show positive balances for all the funds, meant that the accounting showed clearly that TIF tax capture would be used to help pay for the Library Lane underground parking garage.

At the council’s audit committee meeting on March 14, 2013, the city’s chief financial officer, Tom Crawford, sketched out the general history of the DDA, when it used TIF funds at the beginning of its life to repair and construct parking structures. Then the DDA reached a point where the DDA had decided by policy, Crawford explained, that the TIF funds wouldn’t be used for parking, and that TIF revenue would only be used for economic development and other activities. But around 2008-09, Crawford said, when the underground structure was being planned, that approach “was just not going to work.” So the DDA had changed its policy – which is the DDA’s purview, Crawford said.

About the statement in the FY 2012 audit report, which indicated that only parking revenues are used to pay for parking structure debt, Crawford allowed that “the words could be improved.”

DDA: Council Communications – Task Force

During the council communications at the end of the meeting, audit committee member Sally Petersen (Ward 2) alerted her colleagues on the council that she’d be proposing a task force on the DDA, in order to get better alignment between the city and the DDA. She indicated that Stephen Kunselman (Ward 3) was aware of her desire to form a task force. She felt the task force could run in parallel with consideration of the changes to the DDA ordinance. She described the ordinance changes as tactical, implying that the task force would focus on strategic approaches. The task force proposal would likely come to the council on April 1, she said.

Mayor John Hieftje volunteered that every time the city had asked the DDA to do something, the DDA had helped.

Sumi Kailasapathy (Ward 1) responded to a remark made by Hieftje earlier in the meeting, during the brief deliberations on the ordinance amendments, about his concern that the city’s general fund might be put at risk by the kind of changes she and Kunselman were proposing. She said that for her, it was a matter of making sure that compliance with the state statute was ensured, and that the numbers were right. The first step, she indicated, was to make sure the calculations were correct and that there was compliance with the regulations. After that, the question could be opened about whether money comes back to the city. The city’s motivation should not be to turn the DDA into “a cash cow,” she concluded.

Hieftje told Kailasapathy that he didn’t disagree with what she was saying, but he’d just wanted to make the point that the DDA had been very cooperative.

Summit Townhomes Zoning and Site Plan

At the March 18 meeting, the council was asked to consider the site plan and necessary zoning for the Summit Townhomes project. The property is located at 2081 E. Ellsworth Road.

The parcel for the Summit Townhomes development (shaded yellow). The city council voted to postpone a final decision on zoning the parcel to R3 (townhouse dwelling district). The blue line is the boundary between the Malletts Creek and the Swift Run watersheds.

The developer plans to build 24 attached residential units in four separate buildings, with each building between 80 to 160 feet in length. Each of the 24 units would have a floor area of about 1,300 square feet, and an attached one-car garage. The plan includes two surface parking areas on the east and west sides of the site, each with 12 spaces. To do this, the property needs to be zoned as R3 (townhouse district).

March 18 was the first time the site plan had been before the council. But the R3 zoning for the property, annexed from Pittsfield Township, had been previously considered by the council, and referred to the planning commission for re-review. The planning commission then confirmed its original recommendation for R3 zoning.

In more chronological detail, the zoning item had first appeared on the city council’s Jan. 7, 2013 agenda, when it received initial approval. However, during a public hearing at the council’s Feb. 4, 2013 meeting, about a half dozen people spoke in opposition to the zoning – citing concerns about congestion and overcrowding. So councilmembers voted unanimously to refer the zoning issue back to planning commissioners for another look. The council indicated interest in hearing more detail on drainage issues, and the level of recreational services offered in that general area of the city, as well as information about public safety issues.

At their Feb. 21, 2013 meeting, planning commissioners voted again to recommend that the site be zoned R3 (townhouse district) – the same zoning they had previously recommended at their Nov. 20, 2012 meeting.

The project has been working its way through the city’s approval process for several months. The site plan had been postponed by planning commissioners in June of 2012 and again on Nov. 20, 2012, but was ultimately recommended for approval at the commission’s meeting on Jan. 3, 2013.

Before recommending the site plan, planning commissioners had previously recommended approval of annexation and zoning of the site in 2012. At their June 19, 2012 meeting, commissioners had approved annexing the 2.95-acre site, just east of Stone School Road, from Pittsfield Township into the city of Ann Arbor. The annexation was subsequently authorized by the city council.

Summit Townhomes Zoning, Site Plan: Public Hearings

Thomas Partridge wanted civil rights amendments attached to the rezoning request, as well as for all similar requests, that would ensure access to affordable housing.

Ethel Potts told the council that they’d “wisely” sent the question back to the planning commission for a second look. She said she wouldn’t characterize the commission’s “discussion or lack of discussion.” There are three or four townhouse developments in that area of town, she said, and she didn’t think that part of town needed more townhouses.

Summit Townhomes Zoning, Site Plan: Council Discussion

When the council reached the rezoning item, Marcia Higgins (Ward 4) indicated she wanted to have the city attorney look into a question before voting, so she moved to lay the question on the table. The council voted unanimously to lay the question on the table.

Later in the meeting, when the council reached the agenda item about the site plan, the council took the zoning back up off the table.

Christopher Taylor (Ward 3) led off deliberations by reciting the history of the council’s previous postponement, based on concerns about the already-existing density of the area. He mentioned the council’s decision to refer it back to the planning commission, and the commission’s re-affirmation of the recommended R3 (townhouse) zoning. Taylor stated that he was “unwilling to take that at this time.” So he wanted to postpone the question another 30 days to allow for additional time to reflect on the appropriate zoning for that area – in the context of the city’s master plan and the existing density.

Higgins indicated support for the postponement. She pointed out that it’s the first time the city is applying zoning to this parcel, because the city had just recently annexed the property from the township. There is no pre-existing city zoning. She wanted to see it “a little less dense.”

Sabra Briere (Ward 1), who is the city council’s representative to the planning commission, told the council she would carry the message to the planning commission at its next meeting.

Higgins noted that she didn’t know that there was a particular message to convey to the planning commission, but she encouraged Briere to inform the planning commission that the council had postponed the question and to relate the reason for the postponement.

Stephen Kunselman (Ward 3) said that just because there’s already R3 zoning in the area with several dense townhome developments doesn’t mean it warrants more. At some point, the infrastructure can’t handle it. The traffic on Ellsworth already gets backed up, especially now that Costco has opened, he said. He was looking forward to different zoning. He allowed that R1C might not fit, but said that the topography of the property had to be respected. Townhomes on a hill would require a significant amount of earthmoving – and that has consequences for everybody downhill. As downhill properties he noted Arbor Oaks and Forest Hills. There’s a need to think outside the box, when it goes back to the planning commission, Kunselman concluded. [This remark by Kunselman may have contributed to confusion about expectations for possible planning commission action. According to planning manager Wendy Rampson, who was contacted by The Chronicle later in the week, there has been no direction given to planning staff or the commission to consider the matter further.]

Outcome: The council voted unanimously to postpone the zoning until its April 15, 2013 meeting. The site plan was also similarly postponed, in a separate vote.

Zoning Board of Appeals Chair

On the March 18 agenda was a resolution to appoint a chair for the zoning board of appeals (ZBA): Alex Milshteyn, who already serves on the ZBA. He’s a replacement for Carol Kuhnke, who resigned in December 2012 after being elected judge of the 22nd Circuit Court. The ZBA is somewhat different from most other city boards and commissions, which elect their own chair from within the body. The council appoints the chair of the ZBA.

Sabra Briere (Ward 1), who previously served on the zoning board of appeals, introduced the item. She said she’d enjoyed having the leadership of Carol Kuhnke as chair. Briere was confident that Milshteyn would also be an effective and capable chair of the ZBA.

Outcome: The council voted unanimously to appoint Alex Milshteyn as chair of the ZBA.

The Shoppes at 3600

Before the council for its consideration was the site plan as well as the rezoning for a proposed retail development at 3600 Plymouth Road, just west of US-23 – called The Shoppes at 3600.

Aerial map of the location for The Shoppes at 3600, located off of Plymouth Road west of US-23.

The developer hopes to build a 9,490-square foot, one-story retail building, to be constructed in what’s now the parking lot and front yard for a hotel, at an estimated cost of $1 million. The building would have space for several businesses, including a restaurant with a one-lane drive-through window and outdoor seating. An existing shared driveway off of Plymouth Road would be used to access the site. The site plan calls for 33 parking spots and four covered bike parking spots near the entrance.

The March 18 agenda items on the site plan and the rezoning – from R5 (motel-hotel district) to C3 (fringe commercial district) – followed an initial vote of approval for the zoning at the council’s Feb. 19, 2013 meeting. Voting against the rezoning on the initial consideration was Stephen Kunselman (Ward 3).

The planning commission had recommended approval at its Jan. 15, 2013 meeting. The project had been postponed by the commission on Nov. 7, 2012.

The site is located in the same complex as the Holiday Inn North Campus. Responding to some planning commissioner concerns voiced at the November 2012 meeting, the developer had provided an alternative site plan that was reviewed on Jan. 15. But the developer sought approval for the original layout, which was ultimately recommended for approval by the planning commission. The owner is listed as Ann Arbor Farms Hotel Corp., with property being developed by Diverse Development in Holland, Ohio.

The Shoppes at 3600: Public Hearings

Thomas Partridge questioned the idea that the item could appear on the council’s agenda without the sponsorship of a councilmember or the mayor. He called for an amendment to zoning that would ensure access to the property for affordable transportation.

Warren Attarian addressed the council and objected to the site plan. He noted that it’s the first thing you see coming into the city, and there were five shops squeezed into a little more than an acre. The back of the buildings is up against the sidewalk, with no setback, while the front of the buildings is interior to the development. He noted that the planning commission had asked the developer to present an alternate layout, which the developer did. Although the planning staff had determined the alternate plan was feasible, the developer didn’t pursue it. He asked the council not to approve the site plan, venturing that the real problem was trying to squeeze five stores into one acre.

The Shoppes at 3600: Council Deliberations

Jane Lumm (Ward 2) asked city planning manager Wendy Rampson to explain the landscaping requirements. Rampson explained that the site has frontage on M-14, which requires right-of-way buffering. Some mitigation was also required for some landmark trees. There would be trees around the perimeter, Rampson said, as wells as some lilacs and shrubs on Plymouth. She thought that red oaks would be planted along the M-14 on-ramp.

Rampson explained that the back of the building is the north side.

Outcome: The council voted unanimously to approve the rezoning. Later in the meeting, the council voted to approve the site plan over the lone dissent of Stephen Kunselman (Ward 3).

Liquor Licenses

The Ann Arbor city council considered a resolution objecting to the renewal of the liquor license for The Arena – a bar located on the northeast corner of Washington and Fourth in downtown Ann Arbor.

Jane Lumm at the March 6, 2013 hearing on the non-renewal recommendation of The Arena’s liquor license. She served as hearing officer.

The basis of the objection to the renewal, which needs to be forwarded to the Michigan Liquor Control Commission for final action, was The Arena’s failure to pay a combined $8,755 of 2011 taxes and an additional default judgment. The default judgment was made in the 15th District Court by then-judge Julie Creal in favor of the city for $1,659. It involved non-payment for police services, in connection with outdoor tents for an Oktoberfest event.

A hearing on The Arena’s liquor license renewal was held on March 6, 2013 – presided over by hearing officer Jane Lumm, who represents Ward 2 on the city council. Based on evidence presented by assistant city attorney Bob West, who called city clerk Jackie Beaudry and city treasurer Matt Horning as witnesses, Lumm concluded that the recommendation of non-renewal should be placed on the March 18, 2013 city council agenda.

Also on March 6, a hearing was conducted on the non-renewal of the license for Banfield’s Bar & Grill. Lumm issued a similar verdict on that case, but in the meantime, Banfield’s paid the taxes owed. So Banfield’s was on the agenda with three other establishments that were recommended to have their licenses renewed. The three other establishments recommended for renewal by the council on March 18 – all of which had rectified any issues prior to the March 6 hearings – included Aut Bar, Bagger Dave’s Legendary Burgers & Fries, and Café Zola.

At the council’s March 18 meeting, Lumm introduced the item on objecting to renewal of The Arena’s license. She took the occasion to thank the staff in the city attorney’s office, the building department, fire department, police department, the city clerk’s office and the treasurer’s office. She also thanked her fellow liquor license review committee members, Mike Anglin (Ward 5) and Sumi Kailasapathy (Ward 1).

Outcome: On separate votes, the council recommended renewal of four liquor licenses, and objected to the renewal of The Arena’s license. Based on a subsequent Chronicle visit to The Arena, the owner’s intent is to pay the outstanding bills before the state liquor control commission rules on the license renewal.

Sign Ordinance Amendments

The council was asked to give initial approval to changes in the city’s sign ordinance. If the changes are ratified at a second and final vote, certain kinds of digital signs with specific limitations would be allowed in the city. [.pdf of proposed outdoor advertising ordinance]

Billboards on West Liberty Street at First, near the edge of downtown Ann Arbor, looking east. (Photo illustration by The Chronicle.)

But under the ordinance revisions, new billboards – signs with an area greater than 200 square feet – could not be constructed. And existing signs of that size could not have electronic features added to allow for changeable text or images.

The existing sign ordinance does not allow for any changeable text, except for “noncommercial information which requires periodic change” – like time and temperature. So the proposed changes to the ordinance would allow for changeable portions of a sign, subject to the limitation that the changeable portion of the sign not be more than half the area of any sign and no more than 30 square feet per sign and 15 square feet per sign face. Additional limitations would prevent flashing and scrolling – by not allowing changes to content more often than 15 minutes.

The proposed ordinance changes would place a maximum brightness of any illuminated sign, including those that are digital/electronic: 5,000 nits during the day and 100 nits at night, and in no case greater than 0.1 foot-candles above the already existing amount of light at a residential property line. One nit is defined as one candela per square meter. And a candela is about the amount of light produced by a common tallow candle.

By way of comparison, an iPhone 5 display is reported to have a brightness of about 500 nits.

The ordinance revisions come in the context of a moratorium on digital billboards that’s currently in place throughout the city, but is scheduled to expire on April 11, 2013. The city extended the moratorium for an additional 180 days at its Oct. 1, 2012 meeting, after the moratorium was first enacted for 180 days at the council’s April 17, 2012 meeting.

Falling under the moratorium are “billboards commonly referred to as ‘electronic message centers,’ ‘electronic message boards,’ ‘changeable electronic variable message signs,’ or any billboard containing LEDs, LCDs, plasma displays, or any similar technology to project an illuminated image that can be caused to move or change, or to appear to move or change, by a method other than physically removing and replacing the sign or its components, including by digital or electronic input.”

The moratorium resolution passed by the city council acknowledges that such signs are prohibited by the city’s current sign ordinance. From that ordinance, the list of prohibited signs include those that “… incorporate in any manner or are illuminated by any flashing or moving lights other than for conveyance of noncommercial information which requires periodic change.”

Sign Ordinance Amendments: Council Deliberations

Christopher Taylor (Ward 3) recited the history of the moratorium. The proposed revisions essentially preserve the status quo, he said, by allowing no new billboards. The current ordinance allows for up to 30 billboards citywide, and there are currently 28. That meant that the change eliminates the possibility of an additional two billboards. He stressed that existing billboards could continue to exist as nonconforming signs and continue to be repaired and maintained.

Gas station price signs are covered by the ordinance revisions, he said. There are also a number of changes intended to improve clarity.

He noted that the moratorium expires April 11. If the ordinance revision were given initial approval that evening, and final approval on April 1, then the ordinance changes would be enacted before the expiration of the moratorium.

Sally Petersen (Ward 2) asked for some clarification of the ordinance revisions. Are digital signs permitted as long as they’re not scrolling? How big can they be?

City planning manager Wendy Rampson explained that the ordinance revisions dealt with digital components, because it’s become a popular sign form in the industry. The ordinance would allow for a small amount of changeable copy both for on- and off-premise signs. But the amount of the changeable area could not be more than 50% and could not total more than 15 square feet per side. It would allow for different worship services to be displayed at a church, she explained, or gas station price changes. But she pointed out that the ordinance language specified the changeable part couldn’t change more frequently than once every 15 minutes and couldn’t “scroll, explode, dance” – because that’s perceived as a distraction to vehicular traffic.

The ordinance language states:

Changeable copy shall not and shall not appear to flash, undulate, pulse, blink, expand, contract, bounce, rotate, spin, twist, or otherwise move.

Mike Anglin (Ward 5) asked for some illustrations to make clear what the ordinance language meant, saying, “our imaginations aren’t that fertile” and “the words don’t help.” He felt it was entirely too complicated for someone not familiar with the industry.

Margie Teall (Ward 4) wanted to know if the Pioneer High School sign at Stadium and Main would be affected, venturing that the city did not have jurisdiction over the school. Rampson confirmed that was the case, just as the city had no jurisdiction over the signs at the University of Michigan football stadium.

Petersen wanted to know if Anglin was interested in postponing the vote. Anglin didn’t feel a need to postpone – as long as the staff provided the council with the information he’d requested by the time of the second vote. Anglin ventured that the corner of Madison and Main was “beginning to look like Coney Island.”

Chuck Warpehoski (Ward 5) and Jane Lumm (Ward 2) expressed tentative support for the changes – and were content to vote yes at first reading.

Petersen said she was “hard-pressed to support this at first reading.” She felt that the use of signs is an opportunity to impact economic development. She also pointed out the school district and the University of Michigan don’t have to comply and that would result in a lack of uniformity.

Outcome: The council voted to give initial approval of the revisions to the sign ordinance. Dissenting were
Marcia Higgins (Ward 4) and Sally Petersen (Ward 2).

Argo Parking Lease

A resolution on the council’s March 18 consent agenda related to a $3,000 lease to accommodate overflow parking for the Argo canoe livery. The lease had been recommended for approval by the city’s park advisory commission at its Feb. 26, 2013 meeting. The lease of a parking lot at 416 Longshore Drive – with about 40 spaces – will cover Saturdays, Sundays and holidays from May 25 to Sept. 2, 2013, with an option to renew administratively for two successive one-year periods.

City parks staff reported that the overflow parking at this lot had been used during the 2012 season, and they recommended continuing the lease. According to city records, the land is owned by the Stewardship Network.

Items on the consent agenda are voted on as a group by the council, but any of the items can be separated out for separate discussion. Sabra Briere (Ward 1) asked that the item be separated out.

Briere had heard concerns that the lot is not very well-graded and that there’s a lot of runoff. She wondered if there was a way for the city to enforce maintenance of the lot through the lease. Sumedh Bahl, the city’s community services area administrator, told Briere that would have to be negotiated, and had not been a part of the conversation that went into the lease that the council was being asked to approve.

Briere asked for postponement.

Outcome: The council voted unanimously to postpone the parking lot lease.

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. Here are some highlights.

Comm/Comm: Fire Department Resource Deployment

At the request of Marcia Higgins (Ward 4) during communications time, city administrator Steve Powers summarized the feedback that had been heard on a proposal made about a year ago to reconfigure fire stations in the city. The proposal called for deploying a total of three out six existing fire stations – instead of five, which is the current deployment. Powers said what was heard at the seven public meetings and on the online A2 Open City Hall was a lot of divided opinion. He indicated that the significant policy question emerging from that discussion related to the responsibility of the fire department for emergency medical response.

Powers characterized the feedback that staff had received as consistent with the council’s discussion at its March 11, 2013 work session. At that session, there seemed to be a clear majority view that the 3-station plan would not go forward. Higgins indicated interest in exploring alternate ideas and wanted an opportunity to ask more questions. [At the work session, she'd mooted the idea of getting a cost analysis for restoring staffing to six stations.] The result of the back-and-forth between Higgins and Powers was an understanding that deployment of fire department resources might be part of the council’s work session on March 25.

Comm/Comm: Transparency

Between 1:30 a.m. and 2 a.m., two people weighed in on the topic of transparency. Mark Koroi recalled the issue that had arisen in 2009 in connection with emails sent between councilmembers during council meetings. Currently, he said the council has a problem with the way it conducts its closed sessions. He told the council more public commentary was needed – an allusion to the fact that the council does not allow public commentary at its work sessions.

[Under Michigan's Open Meetings Act, a gathering of more than a quorum of councilmembers does not necessarily constitute a "meeting" under the statute, which would require that members of the public are allowed to address the body. However, at work sessions, councilmembers engage in deliberations toward decisions, which makes their work sessions meetings under the statute.]

Koroi also mentioned an appeal that’s been filed on the Dream Night Club case. [The city objected to the renewal of the club's liquor license last year – alleging that the establishment was an ongoing nuisance – and the state liquor control commission followed that recommendation.]

John Floyd led off his comments on a lighthearted note, saying that in deciding his NCAA basketball tournament picks, he’d wanted to go with Michigan, but Wisconsin seems like they’re really starting to gel.

On the topic of transparency, he noted that people speak about how important transparency is. With respect to the legal advice that the council had received on the possible moratorium for D1 site plans, he allowed that it makes sense to receive the attorney’s advice in private. Councilmembers had indicated they’d based their vote on that advice. Now that the council had received the advice and voted, he suggested, the council could choose to release the written advice to the public. It’s not about what council is required to do, Floyd said, but rather about what the council may do. [The sentiment expressed by Floyd had been incorporated in The Chronicle's commentary and questions on the city's draft FOIA policy.]

Comm/Comm: Skating Rink

Alan Haber reminded the council of a continuing effort to have a public skating rink on top of the Library Lane underground parking garage, for people to have fun. [Recent Chronicle coverage of this topic includes the Feb. 26, 2013 park advisory commission meeting when public commentary was delivered advocating for a park atop Library Lane, and a more formal discussion at PAC's March 19, 2013 meeting.]

Present: Jane Lumm, Mike Anglin, Margie Teall, Sabra Briere, Sumi Kailasapathy, Sally Petersen, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Chuck Warpehoski.

Next council meeting: Monday, April 1, 2013 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron. [Check Chronicle event listings to confirm date.]

The Chronicle survives in part through regular voluntary subscriptions to support our coverage of publicly-funded entities like the Ann Arbor city council. If you’re already supporting The Chronicle, please encourage your friends, neighbors and coworkers to do the same. Click this link for details: Subscribe to The Chronicle.

For the first time in the last five years, the DDA board decided to award the full $50,000 of the incentive. Last year, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.

The direct costs for Republic Parking budgeted for FY 2013 – the current fiscal year ending June 30 – are $6,298,423 out of about $18.1 million in budgeted gross revenue for the parking system.

Part of the difference this year leading to the recommendation to award the full $50,000 was improvement in bi-monthly customer surveys over the year – as 72% of customers rated the parking system as at least 4 on a 5-point scale. That compared with 63% of parking patrons who rated the parking system at least a 4 last year.

The DDA’s independent inspector for the parking system completed 48 written reports in the course of the year that evaluated cleanliness of structures and lots. Those ratings averaged 91.71% – an increase over last year’s score of 90.48%. Also counting in Republic’s favor was the fact that the Dec. 31, 2012 accounts receivable balance for parking permit accounts was $7,898.26, which is 1.5% of the amount that is billed on an average monthly basis. The DDA’s target for that figure is 5%.

Dead tickets averaged 1.01% for the year, a decrease from last year’s 2.54%. That came in under the DDA’s target of 1.75%.

At the DDA’s operations committee meeting on March 1, 2013, Republic’s operations manager Art Low asked that other management staff be called out for praise by name – including Stephen Smith, Michael Bandy, Edward Wheeler and Judy Comstock.

A staff memo accompanying the resolution awarding the $50,000 incentive cited other factors, besides improvement in the metrics used to evaluate the amount of the management incentive. The memo highlighted Republic’s performance in connection with the opening of the new 711-space Library Lane underground parking garage and the installation of automated payment equipment.

The Ann Arbor DDA manages the city’s public parking system under contract with the city of Ann Arbor. The contract calls for 17.5% of gross parking revenues to be paid to the city of Ann Arbor.

This brief was filed from the Ann Arbor DDA offices located at 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings. A more detailed report of the meeting will follow: [link]

Leah Gunn, chair of the Ann Arbor Downtown Development Authority board. (Photos by the writer.)

For FY 2014, the DDA budget calls for $23.1 million in expenditures against $23.4 million in revenues. That would add about $300,000 to the total fund balance reserve, which is projected to end FY 2014 fiscal at around $5.5 million. The surplus from FY 2014 would be used in the FY 2015 budget, which calls for $23.8 million in expenditures against $23.5 in revenues, leaving the DDA with about $5.2 million in total fund balance reserve at the end of FY 2015. Reserve amounts indicated in the budget are about $800,000 more than the “true fund balance” – because the money lent to the DDA by Republic Parking for installation of new equipment is recorded as revenue.

Some of the larger categories of expenses in the $23.1 million expense budget for FY 2014, which is similar to FY 2015, are: payments to Republic Parking for operating the public parking system ($6.5 million); bond payments and interest ($6.6 million); payments to the city of Ann Arbor ($3 million in parking revenue and $500,000 for the police/courts facility); capital costs ($2 million); administration ($800,000); and alternative transportation ($615,000).

The alternative transportation allocation would fall a bit short of covering this year’s $623,662 request from the Ann Arbor Transportation Authority to support the getDowntown program, which includes a subsidy to cover the cost of rides taken with the go!pass. That compares with $553,488 granted by the DDA last year to support getDowntown. A presentation made previously to the operations committee – by Michael Ford, CEO of the AATA, and Nancy Shore, director of the getDowntown program – was also given to the full board at the Feb. 6 meeting. The presentation highlighted the fact that 31% of go!pass riders get on the bus east of US-23.

Money in the budget labeled “discretionary” could cover the gap between AATA’s request and the amount in the budget slated for alternative transportation. That money is one of a number of “placeholder” items included in the budget – like $250,000 for a possible arrangement with the city of Ann Arbor for additional police patrols in the downtown. Another $300,000 could be used for a range of capital projects – from sidewalk improvements for patio dining in the State Street area, to streetscape improvements for William Street, to alley improvements near the Bell Tower Hotel.

The board did not discuss remarks made earlier in the week by Ward 3 city councilmember Stephen Kunselman, who at the council’s Feb. 4 meeting called for a number of changes to the city’s DDA ordinance. If enacted, the changes could have a significant impact on the DDA’s revenue from its tax increment finance (TIF) budget. Of the DDA’s roughly $23 million revenue budget, about $4 million comes from TIF capture, with the remainder coming from the public parking system.

The DDA board meeting featured public commentary from Alan Haber, a self-described “agitator” for a public park on top of the Library Lane underground parking garage, and a briefing from Ray Detter, chair of the downtown citizens advisory council, on the status of the 413 E. Huron project. The previous evening, that proposed residential project had failed to achieve the six votes it needed for a planning commission recommendation of approval. The project is still expected to be brought to the city council for consideration, possibly on March 18.

The board was also presented with this year’s edition of the DDA’s “State of the Downtown” report, which summarizes a number of statistics about the DDA district.

FY 2014-2015 Budgets

DDA revenues come from two main sources – tax increment finance (TIF) capture and Ann Arbor’s public parking system. The DDA’s budget comprises four separate funds: the TIF fund, the parking fund, the housing fund and the parking maintenance fund. The housing and parking maintenance funds receive their revenue as transfers from the TIF fund and the parking fund, respectively. [.pdf of draft DDA budgets FY 2014 and FY 2015]

The DDA board was asked to approve budgets for two fiscal years – FY 2014 and FY 2015 – which reflects the city of Ann Arbor’s two-year budget planning cycle. Despite the two-year planning cycle, the city council adopts budgets one year at a time. Under the city charter, the council needs to make any amendments to the city administrator’s proposed budget and adopt them by the conclusion of its second meeting in May, which falls this year on May 20, 2013.

Budgets: Parking Fund

The parking fund is budgeted to receive about $19.3 million in revenue for FY 2014. Major expenses include a total of about $10.7 million in operations expenses (which includes a roughly $6.5 million payment to Republic Parking, about $500,000 to rent some of the surfaces lots, and roughly $3 million for the city of Ann Arbor, which receives 17.5% of gross parking revenues). The FY 2014 budget also includes a $4.4 million transfer from the parking fund to the parking maintenance fund. That’s an amount that is meant to make up for the last two years, during which transfers had not been made at the historically usual level of $2 million a year.

The amount actually spent on parking maintenance could change, after the DDA receives its regular engineering report from its consultant, Carl Walker Inc., who does regular inspection of the parking structures.

Besides operation and capital maintenance of the parking system, revenues to the public parking system have historically been used by the DDA to support the getDowntown program’s go!pass subsidy. The go!pass is a bus pass that downtown employees obtain through their employers, who pay $10 annually for passes for each of their employees.

Michael Ford, CEO of the Ann Arbor Transportation Authority.

At the Feb. 6 full board meeting, Michael Ford – CEO of the Ann Arbor Transportation Authority – made the same presentation he’d made to the operations committee two weeks earlier. He requested a total of $623,662 to support the getDowntown program, including the go!pass subsidy. That compares with $553,488 granted by the DDA last year. For FY 2014, the DDA’s budget calls for a $600,000 allocation that could cover most of that request. The getDowntown program is administratively a part of the AATA.

This year’s draft budget also calls for $250,000 in parking revenue to be spent on a possible arrangement with the city of Ann Arbor to pay for additional downtown police patrols. At the board’s Feb. 6 meeting, Roger Hewitt said no decision had been made on that arrangement and that the goal of improved safety might be achieved in other ways. He said that the amount was available to be spent on the “safe” part of “clean and safe” – a motto the board has essentially adopted as a goal for the downtown.

Budgets: TIF

Another $300,000 in the FY 2014 budget that could be used somewhat flexibly is in the TIF (tax increment finance) fund budget, labeled “capital construction.” It could be used to fund sidewalk improvements between William and Liberty along State Street to facilitate patio dining for restaurants along that strip – or streetscape improvements for William Street, or even alley improvements near the Bell Tower Hotel.

In reviewing the TIF fund budget, Roger Hewitt noted that revenues were anticipated to be slightly under $4 million for FY 2014. The biggest chunk of the TIF budget is the $3.4 million bond payments associated with the Library Lane underground parking structure and the Fifth and Division streetscape improvement projects.

The professional services line item ($161,833) was described by Hewitt as including engineering and legal consulting work. Also highlighted by Hewitt in the TIF budget were (1) the line item for sidewalk repairs and holiday lights ($140,000) and (2) a transfer out of the TIF fund to the housing fund ($100,000). Hewitt also noted a $508,608 line item in the TIF budget as the DDA’s annual contribution to the city of Ann Arbor for the police/courts facility (known as the Justice Center). Hewitt also mentioned a $100,000 item for the DDA’s energy saving grant program. There’s also a $100,000 line item labeled “discretionary,” in addition to the $300,000 that could be flexibly spent on capital construction costs.

The DDA divides the salaries and benefits of staff equally between the parking fund and the TIF fund. The total for salaries and benefits is roughly $557,000. The TIF fund portion is roughly $279,000.

Outcome: The board voted unanimously to adopt the budgets for FY 2014 and FY 2015 as presented.

Budgets: Future TIF, Administration

The approval of the DDA’s budgets came two days after Ward 3 Ann Arbor city councilmember Stephen Kunselman told his council colleagues at their Feb. 4 meeting that he would be continuing to press for changes to the city ordinance regulating the DDA’s TIF capture and governance.

The change to the way that TIF is calculated would be based on a different interpretation of the existing language in the ordinance, but would result in roughly $600,000 a year less in TIF capture by the DDA. It’s the same proposal Kunselman made on May 21, 2012 – as a proposed amendment to the city budget last year. On that occasion, his proposal received just three votes on the 11-member council; however, the current composition of the council includes three new councilmembers. For additional Chronicle reporting of the TIF calculations, see: “Column: TIF Capture Is a Varsity Sport.”

Kunselman’s view on the correct interpretation of the TIF calculation is one that was shared at least at one time by the Ann Arbor city attorney’s office. An apparently overlooked clause of the city’s ordinance on DDA TIF capture led the board nearly two years ago, on May 2, 2011, to delay a vote on the new contract between the city and the DDA, under which the DDA administers the city’s public parking system. The Ann Arbor District Library, whose taxes in the district are subject to the DDA’s TIF, has also questioned the correct interpretation of the ordinance.

But Kunselman’s remarks at the council’s Feb. 4 meeting went beyond the correct calculation of the TIF capture. Kunselman also called for changes to DDA governance, which would include term limits on board members, a prohibition against elected officials serving on the board, a requirement that any TIF expenditures outside the DDA district boundaries need the council’s approval, and a requirement that TIF “rebates” for projects require city council approval.

His remarks on Feb. 4 were consistent with criticism of the DDA that was part of Kunselman’s last campaign to represent Ward 3 on the city council (in 2011). That was a three-way race that included Ingrid Ault and Marwan Issa. Kunselman took out petitions for this year’s race on Nov. 3, 2012. He might face competition in that race from Julie Grand, current chair of the city’s park advisory commission, who is mulling a possible candidacy for Ward 3 city council.

Kunselman’s Feb. 4 remarks also included a criticism of the amount of “administration” costs in the DDA annual report from 2012, which was forwarded to the city council in January. The line item for “administration” in the annual report is $2,104,526.

Responding to a request from The Chronicle, DDA executive director Susan Pollay provided the following breakdown of that amount:

Staff, office, professional services    $1,018,259
Grant to the city for the Municipal Ctr   $508,608
Other TIF grants and projects             $110,267
Grant for go!passes, other alt programs   $467,392
Total                                   $2,104,526

-

The “annual report” thus covers a different category of expenses than the budget line items ordinarily associated with “administrative overhead.”

During the presentations of the DDA’s budgets, mayor John Hieftje got confirmation of the amounts listed for administration, salaries and benefits, which total $814,430 for FY 2014. Kunselman is quoted in the February edition of The Ann Arbor Observer as saying that he will run for mayor, if Hieftje seeks re-election in 2014.

Parking Report

The monthly parking report is included as part of every monthly DDA board meeting. For detailed coverage of the most recent month’s parking data, from December 2012, see: “DDA Preps Budget for Transportation, Cops.” That report is based on a presentation from the Jan. 25, 2013 DDA operations committee meeting. Those numbers show an increase in revenues of about 7.2% compared with December 2011, and a drop in the number of hourly patrons by 8.5%. Those numbers come in the context of a 13% increase in the number of parking spaces in the system – from 6,870 to 7,805. Mitigating factors cited by Republic Parking manager Art Lowe at the Jan. 25 committee meeting include the fact that Midnight Madness fell this year in November, not December, and that in 2011 Christmas and New Year’s fell on the weekend.

At the full board meeting on Feb. 6, Roger Hewitt indicated that the operations committee was continuing to consider ways to provide more detail in the parking reports to give a more accurate barometer of actual usage of the system – instead of just using revenues and the number of hourly patrons.

Hewitt indicated that the numbers continue to show strong growth, and no real slackening in demand for parking or the number of people who are coming to downtown Ann Arbor.

Communications, Committee Reports

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

Comm/Comm: Transit

Following the presentation by AATA CEO Michael Ford and getDowntown director Nancy Shore on their request for funding, mayor John Hieftje apprised the board of ongoing efforts to continue conversations with other communities on expanded transit.

By way of background, a new countywide transit authority was incorporated under Act 196 in the fall of 2012. But that effort at increased, expanded transit has been abandoned after the vast majority of jurisdictions exercised their right under the statute to opt out of the authority. What ended that particular effort for all practical purposes came when the Ann Arbor city council passed a resolution on Nov. 8, 2012 withdrawing the city from the new transit authority.

But the council’s resolution also gave direction to the AATA to continue conversations with immediately neighboring communities about options for improving local transit. The AATA has engaged in talks with communities about a smaller-than-countywide transit authority, with possible members to include the cities of Ann Arbor, Ypsilanti, and Saline, as well as the townships of Pittsfield and Ypsilanti. Involvement with the townships of Superior and Ann Arbor is also a possibility.

It’s those ongoing conversations that Hieftje described at the DDA board’s Feb. 6 meeting. [The mayor sits on the DDA board as provided in the state enabling legislation for DDAs.] Hieftje said he thought the AATA did a good job of outreach during the effort to expand to a countywide authority. After the Ann Arbor city council effectively ended that process, the conversations have continued, he said. The workforce that comes into Ann Arbor from the eastern part of Washtenaw County is very vital, Hieftje said. If that service were to be dialed back, he added, it would have an impact on a lot of people.

In an apparent allusion to the state legislature’s decision during its December 2012 lame duck session to include Washtenaw County in a new regional transit authority (RTA) for southeast Michigan, Hieftje stated that Ann Arbor’s “regional interest” was Ypsilanti. [The Ypsilanti city council on Feb. 5 passed a resolution supporting Ann Arbor's position in formally requesting that Washtenaw County be excluded from the RTA. In addition to Washtenaw, the RTA includes the counties of Wayne, Macomb, and Oakland as well as the city of Detroit. The Ann Arbor city council passed a resolution on Dec. 10, 2012 expressing opposition to the inclusion of Washtenaw County in the RTA.]

Comm/Comm: Connector Study

Roger Hewitt reported that the high-capacity transportation connector study committee had meet twice in the previous 24 hours, holding lengthy sessions both times.

By way of background, the study is meant to determine a locally-preferred alternative mode for a high-capacity transit system along the corridor that arcs from US-23 and Plymouth southward along Plymouth to State Street and farther south to I-94. In the fall of 2012, the DDA approved $15,000 as part of a total $30,000 commitment over two years for the project. Other funding partners for the $1.5 million project – which is supported by a $1.2 million federal grant – include the city of Ann Arbor, the AATA and the University of Michigan.

Hewitt reported that the topic of the meetings included the results of an initial effort at community outreach, and updates to the connector website. An initial discussion of appropriate routes and modes had taken place. Hewitt indicated that concerns about routing had started to emerge.

Comm/Comm: Downtown Real Estate

During communications time, mayor John Hieftje reported that a representative of Colliers International told attendees of the most recent meeting of the downtown marketing task force that good progress was being made renting out the former location of the downtown location of Borders bookstore, at Liberty and Maynard. Hieftje reported that the presentation from Colliers included observations that a major grocery store would require twice the residential density currently in downtown Ann Arbor. [The current residential population of downtown Ann Arbor is reported in this year's edition of the State of the Downtown report at 4,849.]

Comm/Comm: State of the Downtown

Distributed at the downtown marketing task force was this year’s edition of the “State of the Downtown” report, which summarizes a number of statistics about the DDA district. Reporting from the DDA’s partnerships committee, Joan Lowenstein mentioned the report, and urged board members to look through it.

DDA board members received copies of the “State of the Downtown” report. Left to right: Keith Orr, Joan Lowenstein, John Hieftje.

Board members praised the DDA staff for their work in putting together the report. Roger Hewitt highlighted the 3.1 million square feet of new construction in the district since 1982, when the DDA was first established. Susan Pollay, executive director of the DDA, ventured that the kind of private investment that had been made in the DDA district would not have taken place without the efforts of the DDA. Lowenstein added the value of having the State of the Downtown document is that it compiles information that can be used by the convention and visitors bureau. Ann Arbor SPARK, the local economic development agency, can also use the document in its recruitment and retention efforts, Lowenstein said.

Comm/Comm: Top of the Library Lane Parking Structure – Skating Rink?

Alan Haber introduced himself as an agitator for a park and a “people’s place” on top of the Library Lane underground parking garage. Based on the Jan. 14 presentation by the DDA to the Ann Arbor city council about the Connecting William Street project, Haber said, more time would be taken to figure out what to do with the top of parking garage. Haber concluded that nothing would happen there very soon.

So he suggested that in the interim, while decisions are still being made, all or a substantial part of the surface parking on top of the Library Lane underground parking garage could be made available for people to develop activities there – to show the types of things that the community could begin do in the space, if it were to be developed as a park or as public open space.

Right now, there could be a skating rink at that location, Haber suggested. He contended that establishing a temporary skating rink on top of the Library Lane structure would cost about $50,000. The DDA could allocate a grant to cover part of that cost, he said. The costs would include a platform for establishing the artificial ice. A staff person could be employed there, paid a living wage, to supervise the activity. That would be a good experiment to see what could happen there, Haber said.

The DDA should also begin to look for activities that could be scheduled in the space, he said – like a spring party over the spring equinox weekend. Or there could be an Earth Day party, he suggested. The people of the community need to be invited to see what could be done on the surface of the underground parking garage, while nothing else is happening. It’s counterintuitive, he contended, to park cars on the surface of the underground structure – because people should learn to park underground. So why give people an option, just before they go underground, to park on the surface? The cars that currently are parked on top of the Library Lane structure could park elsewhere in the system, he said, because there is a surplus capacity.

There’s a lot of opportunity to allow people to experiment with stuff that they would like to do, Haber said. He returned to the idea of putting some money into setting up a skating rink, saying that a lot of people could have great fun there during the winter. “Get the cars off the top, let the people on there, and let the greening begin,” Haber concluded.

By way of additional background, at its Dec. 19, 2012 meeting, the DDA’s operations committee was provided with a draft of ideas for a policy on special events at the Library Lane mid-block cut-through and the top of the Library Lane parking garage.

The preamble to the draft includes the expectation that the site would eventually include a building with public open space, but indicates support in the interim for the kind of activity that Haber called for:

The structural component of the underground Library Lane structure was designed to anticipate the construction of a future building and a future public open space area. In the meanwhile, until such time as these elements are designed and constructed, the DDA is supportive of community groups using the Library Lane surface parking lot and the adjoining Library Lane for events, public gatherings and meetings.

In the draft, the main bureaucratic requirement is approval by the city of Ann Arbor for a special events permit, which currently costs $34.

Comm/Comm: 413 E. Huron

Reporting from the most recent downtown citizens advisory council meeting, Ray Detter told the DDA board that the city planning commission had voted on the 413 E. Huron project the previous evening, Feb. 5. He noted that after four hours of deliberation and 33 speakers during the public hearing, the commission voted 5-3 on the recommendation for approval. He noted that six votes are actually required in order to achieve a recommendation of approval. He allowed that the proposal would still be moved on to the city council by the developer. [Responding to an emailed query, city planning manager Wendy Rampson indicated that March 18 might be the earliest possible council meeting when a vote might be scheduled. Any scheduling of a council vote on the project is still tentative.]

By way of additional background on the project, it’s proposed for the northeast corner of Huron and Division, and is estimated to cost $45 million. It calls for combining three lots on that corner and building a 14-story, 271,855-square-foot apartment building with 216 units (533 bedrooms) and underground parking for 132 vehicles. [.pdf of aerial map for the project] It meets the criteria for D1 (downtown core), which is the zoning for the area.

Detter noted that even those planning commissioners who voted for it expressed their dislike for the size, mass, and design of the project. If it’s constructed, he said, it would be the largest building in downtown Ann Arbor. The downtown citizens advisory council took the position that no project should be described as “by right” until it conforms with the adopted city plans and ordinances, and does not have a negative impact on its neighbors. That is not true of 413 E. Huron, Detter contended.

Detter recalled how just a few years ago, the city council had approved the Ann Arbor Discovering Downtown (A2D2) rezoning process and the design guidelines. At the time, Detter said, the downtown citizens advisory council believed that a satisfactory job had been done on that. But the expectation had been that after a year, the outcome of that process would be reviewed. Now is the time, he said, for some changes to be undertaken.

Among the changes the citizens advisory council is calling for, Detter said, are changes to the requirements for public participation meetings. Those meetings are not happening the way they’re supposed to, he contended. In the case of 413 E. Huron, developers had called a meeting, ignored what was said by the participants, and then written an inaccurate report, he said. That report was given to the planning commission. Detter did not want that to happen again.

The developer had also appeared at the one required meeting before the city’s design review board (DRB), and listened, but made none of the changes suggested by the DRB, Detter said. Those changes included suggestions on massing, setbacks and ways to reduce the project’s impact on the nearby historic residential neighborhood. Detter noted that the city’s Historic District Commission had passed a resolution in opposition of the project. He noted that compliance with the recommendations of the DRB is voluntary on the part of developers. So at an upcoming meeting of the DRB, one topic of discussion will be the consideration of future changes to the design review process, Detter reported. The design guidelines need to be clear and more specific, he said, and the ordinance needs “more teeth.” The planning commission and the city council need to be willing to discuss the developer’s response to design guideline recommendations as a part of the process, he said.

The Connecting William Street project recommendations – about the future use of five city-owned properties downtown – call for the planning commission to report to the city council about how developers incorporated changes by the DRB into the project. He contended that the D1 zoning for the 413 E. Huron parcel is wrong. He observed that immediately adjacent to city hall is a surface parking lot – formally used by the Ann Arbor News, and now in use by the University of Michigan Credit Union – which is zoned D1. So it would be possible to build a structure 18 stories high from lot line to lot line on that parcel. That zoning needs to be changed, Detter contended.

Present: Nader Nassif, Newcombe Clark, Roger Hewitt, John Hieftje, John Splitt, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein.

Absent: Bob Guenzel, Sandi Smith, John Mouat.

Next board meeting: Noon on Wednesday, March 6, 2013, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date.]

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South Fifth Avenue entrance ramp to Library Lane underground parking garage. (Photo by the writer.)

And while the most recent figures show revenues to be slightly better than expected for the quarter ending Sept. 30, revenues for just the month of September 2012 showed only a 3% gain against September 2011.

All other things being equal, the 3% revenue increase could be analyzed as increased usage of the parking system. But a couple of significant factors were not equal: total spaces available in the system, and parking rates. Both factors increased significantly more than 3%, indicating a dip in usage.

In September 2012, Ann Arbor’s public parking system offered about 12% more spaces than in September 2011 – 7,824 compared to 6,974 a year ago. Much of that increased inventory is due to the 738 spaces in the new Library Lane underground parking garage.

And parking rates increased 7-9% system-wide in September: Hourly parking structure rates increased from $1.10/hour to $1.20/hour; hourly parking lot rates increased from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates increased from $1.40/hour to $1.50/hour; and monthly parking permit rates increased from $140/month to $145/month.

The count of hourly patrons in the system is also consistent with a usage drop for September 2012 compared to September a year ago – 171,107 compared to 194,034 last year, or nearly 12% fewer patrons.

Discussion of the September parking system revenue totals at the DDA’s operations committee meeting on Oct. 31, 2012 included several factors that might account for the usage drop. In September 2011, the University of Michigan played four home football games, compared to just two this year. And September 2012 included one fewer business day (24 compared to 25) and one fewer weekend day (8 compared to 9) than September 2011. In addition, September 2012 did not include the Friday before Labor Day.

September revenue totals also reflect the fact that one segment of parking customers paid less, despite consistent usage. Holders of monthly permits in structures near the UM campus were offered a substantial discount to move their permits to the new underground Library Lane parking garage – $95 compared to the $145 regular rate. So a portion of the roughly 415 monthly permits that have been sold for the Library Lane garage reflect the discounted rate.

September was the first full month the Library Lane garage was open, without any part of it closed off for construction inspection activity. The garage showed modest revenue gains compared to last month. But somewhat as expected, it is initially lagging behind other facilities measured by revenue per space – $77 per space compared to a system-wide average of $196.

The public parking system will be adding more spaces sometime in mid-March 2013. At the DDA’s operations committee meeting, DDA executive director Susan Pollay indicated that current projections are for the DDA to take possession of the first two floors of Village Green’s City Apartments project on March 15, 2013. The building – located at First and Washington – will contain a 244-space parking deck on those first two floors, 95 of which are to be available for public parking. The rest of the spaces will be used by residents of the 146-unit project, when the construction is completed.

Graphs and some discussion of other ways to measure parking system performance are included in this report.

System-wide Performance

The number of hourly patrons in Ann Arbor’s public parking system for September 2012 was the lowest of any  September in the last four years:

Ann Arbor Public Parking System: Total patrons (green trend line) for September 2012 was a four-year low.

After consistently significant year-over-year revenue gains for the last three years, the 3% increase for September 2012 compared to September 2011 suggests a possible slowing of usage growth – especially in light of the increased capacity of the system and the increase in rates:

Ann Arbor Public Parking System: Total revenue (green trend line) for September 2012 dipped to just about last year’s levels, despite about 10% more spaces available and a rate increase.

System-wide, the growth in average revenue per space appears to have slowed, relative to rate increases. The 738 spaces in the new Library Lane parking garage account for roughly 10% of the system total, so adding 10% to the denominator of the fraction, without a commensurate gain in revenue, will result in a smaller number:

Ann Arbor Public Parking System: Revenue per space, total system (heavy black trend line).

Performance by Facility

The surface lot at Huron/Ashley/First continued the trend of generating the highest amount of revenue per space for any surface lot (or actually any facility) in the system:

Ann Arbor Public Parking System: Revenue per space, focus on surface lots. The Huron/Ashley/First surface lot is the red trend line.

The new Library Lane garage – somewhat as expected – is showing initial revenue per space performance that is significantly less than other structures in the system. As some monthly permits are transferred from the Maynard and the Liberty Square structures to the new Library Lane garage, the revenue per space in those structures should start to climb – as spaces are used by more hourly parkers, who pay relatively more than permit holders:

Ann Arbor Public Parking System: Revenue per space, focus on structures.

Measures of Performance

Despite the apparent drop in usage of the public parking system for September 2012 compared to September 2011, the DDA’s budgeted revenues for the parking system are still on target for the first quarter of the fiscal year 2013, a three-month period that ended Sept. 30. [.pdf of parking budgeted revenues]

Extracted from Ann Arbor public parking system color-coded peak occupancy chart.

The DDA had budgeted $4,520,989 in total parking system revenue and the actual revenue came in at $4,629,763, or about 2.4% better than budgeted.

While financial performance is correlated with usage, conclusions about actual usage can’t be read straight from revenue figures, especially when rates increase – by different amounts for different categories of parking – or when capacity increases.

The number of hourly patrons is a measure that the board receives as part of its monthly reports – a measure that is independent of revenue. But the hourly patrons statistic doesn’t include any information about how long patrons are staying – which sometimes results in speculative conclusions. One such speculative conclusion might be this: Hourly patrons are down, but revenue is up, so they must be staying longer.

The DDA board has in the recent past used other, non-financial ways of looking at system performance, but on a more or less ad hoc basis.

Those methods include looking at peak occupancy by facility, which essentially convinced the board that most of the public parking facilities “max-out” their capacity on a daily basis. [.pdf of peak occupancy data]

Ann Arbor Public Parking System: Efficiency.

A non-financial method that includes off-peak usage focuses on the number of parking hours used. In the summer of 2011, the DDA board’s operations committee was presented with charts showing the ratio of parking hours sold to parking hours available – a statistic which is independent of revenue.

However, the idea of including efficiency data as part of the routine reporting on the parking system has not gained any traction on the DDA board.

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

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

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

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

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

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

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

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

Brownfield Grants: Policy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brownfield Grants: 618 S. Main

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

Brownfield Grants: 618 S. Main – Commentary

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

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

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

Brownfield Grants: 618 S. Main – Board Deliberations

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

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

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

-

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

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

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

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

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

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

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

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

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

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

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

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

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

DDA board member Newcombe Clark.

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

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

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

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

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

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

Parking System

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

Parking System: Monthly Report – Break in Trend

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

Ann Arbor public parking system: Total revenue

Ann Arbor public parking system: Hourly patrons

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

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

Parking System: Demand Management – Maynard, Liberty Square

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Surface Lot Leases

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

Surface Lot Leases: Background

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

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

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

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

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

Surface Lot Leases: Board Deliberations

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

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

Library Lot

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

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

Library Lot – Public Commentary

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

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

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

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

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

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

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

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

Library Lot – Board Response

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

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

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

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

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

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

Library Lot: Public Commentary – Reprise

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

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

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

Annual Budget Adjustment

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

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

DDA board member Roger Hewitt.

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

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

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

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

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

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

Communications, Committee Reports

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

Comm/Comm: State Street

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

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

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

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

Comm/Comm: R4C Zoning Review

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

Comm/Comm: Near North

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

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

Absent: Keith Orr, Joan Lowenstein.

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

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Bob Guenzel chaired his first meeting of the Ann Arbor Downtown Development Authority board on Wednesday. (Photos by the writer.)

Those included the monthly parking report, which showed use of the city’s public parking trending upward compared to last year, as well as an annual report on the structure-by-structure breakdown of the parking system.

The reports presented to the DDA board at their meeting – together with a recent report delivered to the city’s environmental commission about parking trends dating back to the mid-2000s – provide reason for some cautious optimism. The number of people getting access to downtown Ann Arbor by driving there and parking suggests an overall slight upward trend, despite a reduced number of number of hourly patrons earlier this year.

Also related to parking, the board received a presentation on a communications plan that the DDA is developing, targeted at downtown evening employees. That communications plan is meant to make sure those employees are aware of low cost alternatives to using on-street parking spaces. The communications strategy would be part of a possible plan to extend enforcement hours for on-street parking meetings past 6 p.m. The DDA will present its tentative proposal for revisions to parking policies to the city council at a joint working session of the board and the council to be held on Nov. 14.

In response to some of the individual success stories that were presented in connection with parking alternatives, DDA board member Russ Collins said, “I wonder how this positive message will play in the media.”

Collins’ remark could have applied to much of the rest of the meeting as well. The board took the report on the basic current financial health of the parking system as an occasion to talk about the overall economic strength of the downtown. Despite the recent closing of some smaller stores, board members gave reports of strong performances by other businesses.

That positive report contrasted with public commentary about ongoing problems with aggressive panhandling and drug dealing and other fringe behavior exhibited downtown. Mayor John Hieftje, who sits on the DDA board, described how some response is being developed by the Ann Arbor police department.

The construction updates on the Fifth and Division streetscape improvement project and the underground parking garage on Fifth Avenue converged on the Ann Arbor District Library. The projects will result in modifying the downtown library building’s front porch, to facilitate access from the new east-west mid-block street – Library Lane – into the library.

As the underground parking garage nears expected completion in the spring of 2012, brief discussion unfolded among DDA board members on the near-term use of the top of that garage. Also related to potential development in the “midtown area” was a report from the partnerships committee. A steering committee comprising DDA board members and community members will be leading the effort to explore alternative uses of specific city-owned parcels downtown, including the top of the underground parking structure (aka the Library Lot).

It was the first board meeting chaired by Bob Guenzel, who was elected to that position at the DDA’s last meeting, which he was unable to attend.

Parking

Roger Hewitt gave the regular report on the parking system. [.pdf of monthly parking report and annual structure-by-structure analysis] He highlighted the annual profit-and-loss statements for each structure for the past year.

Hewitt noted that those parking structures that have paid off their debt service are profitable, and those that still have outstanding debt are less profitable. For example, he said, Liberty Square has no debt service as well as less labor expense, because it’s unattended. Liberty Square has an annual net income of $1,852/space.

From the report, the structures with bond payments still associated with them have the lowest net annual income: Fourth & Washington (-$610/space), Fourth & William ($53/space) and Maynard ($517/space). Last year, the public parking system as a whole showed a net annual income of $3,452,389, which worked out to $508/per space.

Hewitt note that the new underground parking structure is planned to be unattended – but that doesn’t mean there will be no staff on site. There’ll be maintenance people on site, for example, he said. For a parking structure to be “unattended” means that there won’t be cashiers, he explained.

Hewitt said the DDA is also looking at converting other specific parking structures to operation without cashiers. The DDA is looking at various ways to decrease operating expenses. Hewitt noted that on-street meters are profitable because there is no labor attached to them. Overall, Hewitt said, the revenue is quite good.

Although revenues in the public parking system have continued to show increases since the national economic downturn in 2008, Hewitt has often noted on the occasion of his regular updates to the board over the last couple of years, and in a presentation to the city council, that the increase in revenue is either steady or only sightly more than what would be expected, given the rate increases that have been implemented with city council approval over the last three years.

In August 2011, revenues were up by 11.93% and the number of hourly patrons (as contrasted with those who have monthly permits) were up 4.86% as compared to August 2010. That was a bright point for board members at the Oct. 5 meeting.

In August 2010, the basic rates for structures, surface lots and meters were: $0.90, $1.10 and $1.20 respectively. In August 2011, the rates were $1.00, $1.20, and $1.20, respectively. So the August increase of nearly 12% in revenues outpaced the rate increase.

By way of background on the rate increases, the DDA sent the proposed rate increase to the city council in February 2009, which the city council did not choose to veto. That schedule has been implemented starting in September of each year, after the start of the fiscal year, which begins in July.

             STRUC                  LOT
YEAR          HRLY    PERMIT       HRLY      METER
FY 2009      $0.80      $125      $1.00      $1.00
FY 2010      $0.90      $130      $1.10      $1.20
FY 2011      $1.00      $135      $1.20      $1.20
FY 2012      $1.10      $140      $1.30      $1.40

-

To provide additional perspective on demand for access to downtown Ann Arbor, as measured by use of the parking system, a compilation of monthly year-over-year comparisons from last year’s DDA board meeting information packets yields the following charts:

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

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

In addition to the last two years’ worth of DDA revenue and hourly patron data, it’s useful to look at a report that city environmental coordinator Matt Naud recently completed and presented to the city’s environmental commission. The report was conducted as a condition of the settlement of an environmental lawsuit filed against the city in connection with the underground parking garage on Fifth Avenue, which is currently under construction. ["City Settles Lawsuit, Must Conduct Study"]

It’s important to note that the report compiled by Naud focuses on “garage parking events,” which are not the same as the statistic the DDA tracks called “hourly patrons.” Naud’s study was confined to parking structures, and counted the entry into a garage by a permit holder as a “parking event.” Use of a surface lot was not counted in Naud’s study as a “parking event.” The focus of that study was on the question of how the construction of additional parking structures impact the number of parking events.

The result of the study on its central question could fairly be described as indeterminate. However, the report shows a steady increase from 2005 to 2009 of parking events in downtown Ann Arbor, despite any number of mitigating factors, such as increased bus ridership:

Parking events in downtown Ann Arbor. (Image links to higher resolution .pdf file)

The demand for access to downtown Ann Arbor as measured by the use of the public parking system is likely to be a point of discussion in connection with two current development projects in and near downtown: The Varsity Ann Arbor and Heritage Row.

Heritage Row is a planned unit development (PUD) located one block south of the underground parking garage on Fifth Avenue and outside the DDA district. In connection with Heritage Row, one possibility the city council may be asked to contemplate – at its Oct. 17 meeting – is approval of that project without any on-site parking requirement.

At the Oct. 5 meeting of the DDA board, Roger Hewitt noted that bond costs for the new underground garage will change the revenue and expenditure picture. The underground parking garage on Fifth Avenue between Liberty and William is one of two major construction projects currently managed by the DDA.

Construction Convergence: Library Lane

John Splitt reported on the two major construction projects currently being managed by the DDA: Fifth and Division streetscape improvements; and the underground parking garage. Light poles have been installed on the 200 block of South Fifth, Splitt said. That finishes everything connected to the streetscape improvements except for the block of Fifth Avenue between William and Liberty. That will need to wait until the underground parking garage is complete, he said.

For the parking garage, the east leg is now waterproofed and back-filled with pea gravel. For that east leg section, form work is starting for the surface concrete pouring. [The deck is being constructed from east to west.] For the middle of the garage, more concrete will be poured next week. Splitt said that for the phase under Fifth Avenue, it was hoped to be done as soon as possible. The DDA is pushing Christman Company, the construction manager for the parking garage, to complete that phase by Dec. 31 to get the street opened back up, but Splitt said it could be into January.

John Mouat said he felt that the new Library Lane (a newly constructed east-west mid-block connector between Division Street and Fifth Avenue) always gets forgotten in all of the discussion about the parking garage. He noted that the DDA is now involved in a discussion with the Ann Arbor District Library about the connection from the library to Library Lane. Russ Collins quipped that it should be called “Parker Place,” alluding to AADL director Josie Parker, who was in the audience.

Josie Parker, director of the Ann Arbor District Library, and DDA board chair Bob Guenzel before the Oct. 5 meeting of the Downtown Development Authority.

Parker was asked to come to the podium to update the board on the Library Lane and library building connection. For the moment, she said, because there’s not a new library being built, they’re simply working on redesigning the existing front of the building – which has its public entrance on Fifth Avenue – to get patrons easily from Library Lane to the existing entrance of the building as it is currently located. Part of the plan includes tearing off some elements at the front of the building and redoing them, Parker said. The idea is to reconfigure some of the existing porch area, she said.

When people talk about the Fifth and Division streetscape improvements and finishing up the 300 block of South Fifth Avenue, the library frontage is included in that, Parker said. [The DDA's streetscape project will be paying for this work.] She expressed that the library appreciated very much the library’s inclusion in the planning. The library was grateful for the attention that’s been given, and the effort to accomodate the libary has been tremendous, she said.

The construction work has had a great impact on library workers and patrons, Parker said, but she added that use of the library has not declined during construction on the underground parking garage. Alluding to the downturn in business suffered by nearby businesses like Earthen Jar and Jerusalem Garden – about which their owners have been vocal – Parker allowed that other neighbors have had a different impact.

John Splitt noted that it might not be possible to finish the sidewalk on both sides of Fifth Avenue before spring, but completion of the east side first – the library side – is the goal.

During the discussion of the underground parking structure, Sandi Smith asked what the plan was currently for the surface of the deck. Would it be surface parking? Splitt clarified that surface parking on top of the underground garage would be located primarily in the center section of the deck [viewed from east to west, not top to bottom] and that section would not be finished until the spring.

The top of the underground parking garage is one of five city-owned parcels that the DDA is currently considering for alternative uses – under the direction of the city council given in April 2011. The others are the former YMCA lot, the Palio lot, the Kline lot, and the bottom floor of the parking structure at Fourth and William.

Future Use of Midtown City-Owned Parcels

Joan Lowenstein reported on the the planning process to frame the redevelopment of five city-owned parcels in the downtown that the DDA will be considering.

The partnerships committee had worked on a goals statement for the midtown planning project, she said. [Midtown is the name of one of downtown's zoning overlay character districts, which includes Fifth Avenue as a civic corridor.] Committee members had discussed the idea of forming a leadership steering committee to shepherd the project. That committee would work directly with DDA staff.

Members of the committee who’d agreed to serve in that capacity include: Brittany Affolter-Caine (Ann Arbor SPARK director of talent enhancement); Ron Dankert (former DDA board member and broker with Swisher Commercial); Bob Galardi (retired Ann Arbor Public Schools administrator); Stas’ Kazmierski (managing parter at ZingTrain); Kirk Westphal (film producer, founder of Westphal Associates and member of the Ann Arbor planning commission); Tony Lupo (formerly director of sales and marketing at Salon Vox, now brand manager at New York-based Oribe Hair Care); Nancy Shore (director of Ann Arbor’s getDowntown program); Hillary Murt (member of Michigan Theater board, and former owner of Pen in Hand); and Bonnie Valentine (director of sales and marketing with the Whole Brain Group).

The first meeting of the steering committee will take place on Tuesday, Oct. 11 at 3 p.m. at the DDA’s offices, 150 S. Fifth Ave. Lowenstein said the meeting will be open to the public. Serving on the committee for the DDA will be Lowenstein, Sandi Smith and John Mouat.

Lowenstein described how the partnerships committee had discussed what the deliverables will be for the planning project, which included a defined role for the area, a framework plan and a set of future goals, and a decision-making matrix, all in one document. The idea is also to look at alternative scenarios for achieving development, Lowenstein said – RFPs (requests for proposals) in addition to other options.

Lowenstein also reported that a communications subcommittee of the partnerships committee had been created, consisting of Russ Collins and Newcombe Clark. The goal of the communications subcommittee is to develop a toolbox of resources to communicate with the public and with each other.

Clark reported out that the communications subcommittee will aim to increase DDA visibility and public awareness of what the DDA does and how it adds value. The approach will be both reactive and proactive, he said. The plan is to involve professionals who know how to do public relations and communications. The initial work plan will be to bring in professionals and see what they think the DDA should do. The subcommittee will report out every month. Once the subcommittee has created a toolbox, staff will use it, he said. Collins said he felt that the subcommittee could make good progress for the benefit of the board and the downtown.

Commenting on the midtown development plan, Sandi Smith allowed that it seemed like it was taking a long time, but she saw no reason to rush. [Previous Chronicle coverage: "Downtown Planning Poised to Pause"]

Downtown Behavioral Issues

During public commentary John Teeter, manager at First Martin Corp., introduced himself by saying that First Martin managed 10 different properties in the DDA district. He wanted to share with the board some of issues the real estate company has been suffering thorough with respect to crime and panhandling. He stressed the importance of separating perceptions from the reality – perception is actually a separate issue from the actual problem, he said. The problem, he said, is not homelessness. It’s things like urinating and defecating in elevators. He said that compared to the past 13 years, the problem is worse now than it’s ever been.

The problem is not the local homeless population, Teeter said. Rather, the problem is aggressive panhandling and drug dealing. He described the Ann Arbor community as having been generous with its resources for this part of the population. But just because the community offers more robust support services, he cautioned, doesn’t mean this behavior should be tolerated downtown. He said that one solution would be to apply pressure with police, but he recognized the challenge of doing that in the current fiscal climate. The police force needed to be given sufficient tools and manpower. He ventured that maybe some stronger ordinance language would help.

Teeter told the board that he was not there just to complain. First Martin is trying to help things, he said. First Martin takes care of picking up trash at Liberty Plaza six days a week. [The park is immediately adjacent to a First Martin property]. He said that First Martin also takes care of some upkeep at Wheeler Park and the corner at Depot and Main. Because much of the problem is drug- and alcohol-related, Teeter said, First Martin will be donating $1,000 to the Dawn Farm outreach program.

Diana Neering, chief development officer at the Shelter Association of Washtenaw County, addressed the board to present the DDA with the annual Robert J. Delonis Community Service award. Neering thanked the DDA for its recent support in the form of a grant. [At the DDA board's Oct. 6, 2010 meeting, a year earlier, a $218,050 grant from the DDA's housing fund was awarded for improvements at the association's Delonis Center on Huron Street. The money was to pay for new washers and dryers, lockers and chairs, an emergency generator, energy conservation measures, medical equipment and software.]

Neering then shared a shelter success story about a man who had come to the Delonis Center shelter and how the shelter staff had helped him.

Also realated to the shelter, in his report out from the Downtown Citizens Advisory Council, Ray Detter began by saying that the construction of the Delonis Center would not have happened without Bob Guenzel (then Washtenaw County administrator and now chair of the DDA board) and the strong support of Leah Gunn (currently a Washtenaw County commissioner and DDA board member).

As newly elected chair, Guenzel was prepared to proceed with the agenda after public commentary. But mayor John Hieftje interjected that he’d previously suggested adding an agenda item to allow board members to respond to public commentary, and he felt that this was very good time to do that. With Guenzel’s indulgence, Hieftje then reviewed a meeting the day before held by the downtown marketing task force, when Teeter had expressed many of the same sentiments he’d expressed during public commentary.

Chief of police Barnett Jones had been there, Hieftje said, as well as representatives of the downtown merchant associations. He had then met later with the chief and deputy chief of police, and he felt that they’d come up with some good ideas. He indicated that some new things will be announced in the next few weeks.

One strategy will be that community standards officers will be issuing tickets in alleys for dumpster violations. They’ve sent out notice to merchants saying that they’ll be looking for violations starting in November. Also being considered is stepped up enforcement of the city’s graffiti ordinance. Hieftje said he figured that businesses will push back, but that the merchant associations have said they’ll support the city’s efforts at enforcement. Hieftje said he wanted to make sure everybody gets adequate warning of the stepped up enforcement.

Hieftje said the perception is worse than the problem itself, but is equally meaningful. He went on to describe Ann Arbor’s issues as relatively minor compared with other cities. Other than the unsolved sexual assaults, it’s been a good year with respect to crime stats, Hieftje contended.

Guenzel asked Hieftje if the downtown marketing task force was again meeting monthly. Hieftje indicated it was and that they had a schedule of nine times a year with no meetings in the months of July, August, and December. He said it was nice to have city council members (Sandi Smith and Sabra Briere) and DDA members present for the most recent meeting.

Business Climate Downtown

Russ Collins offered a comment on the relative downtown vitality in Liberty-State area. [Collins is executive director of the Michigan Theater, located near the intersection of Liberty and State.] In August, Collins noted, systemwide parking use was up significantly over a year ago – revenue was up 12% and the number of hourly patrons was up 5%. Collins added that the Michigan Theater had had an unusually strong August. Roger Hewitt, who owns the Red Hawk Bar & Grill and Revive + Replenish downtown, said his two businesses had also had a strong September. He allowed that five University of Michigan home football games can affect things – positively.

Adding to the positive message, Hieftje reported that during the downtown marketing task force meeting the previous day, South State Area Association president Tom Heywood had said that despite the challenges faced by some smaller establishments, business is booming. Hieftje said Heywood had contended at the meeting that the new CVS pharmacy on South State had generated the highest amount of sales per square foot in that chain.

Collins continued with the theme that the right business can succeed in downtown Ann Arbor, by noting that when the John Leidy Shop closed, the Michigan Theater had looked to put a penny candy store in the space – as an extension of something the theater already did, which is to sell concessions. But his organization’s business and market analysis found that such an enterprise was not supportable. He was therefore not surprised when the candy store that set up shop there found it difficult – the Michigan Theater’s business planning would have forecast that outcome, concluded Collins.

Sidewalk, Street Repair Millage

Guenzel asked DDA executive director Susan Pollay if there was an update on the situation with the sidewalk millage. Pollay reviewed how there’d been a general discussion at the operations committee meeting about the two millages on the November ballot: 2 mills for street, and 0.125 mills for sidewalk repair. The DDA’s understanding is that the city will take over repairs previously assigned to property owners, except inside the DDA district, where there will be restrictions. Millage money would be spent on sidewalks inside the DDA district, only if they are adjacent to single-family houses or duplexes. Guenzel confirmed with Pollay that the city’s expectations of the DDA are still being checked out.

Hieftje then commented that he did not feel city councilmembers are out in the community saying that the city absolutely needs the millage or that it’s essential. The sidewalk millage merely offers residents a choice, he contended, of having the city take over the responsibility for sidewalk repair. Everybody who was given notice under the last five-year cycle of the sidewalk repair program will have to pay, Hieftje contended – no one gets a free ride. He reported that the city council’s resolution of intent on the use of the sidewalk and street repair millage funds was still pending before the council.

Public Art, Design

The previous night’s meeting of the Downtown Citizens Advisory Council, said Detter, had begun with the group’s attendance at the dedication of the new fountain designed by German artist Herbert Dreiseitl. Detter described how more than 200 people attended to celebrate the water sculpture, where mayor John Hieftje gave a speech. Former chair of the city’s public art commission, Margaret Parker, as well as the current chair, Marsha Chamberlin, had also made remarks, he said. He said the CAC had for years supported the city’s Percent for Art program.

Detter recounted how in the 1990s, three CAC members had worked with Jan Onder and Parker on the downtown public art committee. With guidance from local architect Dick Mitchell, they had injected art into the Fourth and Washington parking structure, he said. Detter described how one of the meetings took place in Espresso Royale, and how a man who’d overheard their conversation about what they wanted to do had come over to say he wanted to give the group $25,000. Detter identified the man as the owner of the Amadeus building. When former DDA chair Reuben Bergman had passed away, Detter said, another $13,000 had been donated. Within a matter of a few month, Detter said, Onder had raised another $85,000.

After the dedication ceremony for the fountain on the municipal center plaza, Detter said, the CAC discussed The Varsity at Ann Arbor project. [The same evening as the dedication, the city planning commission voted to recommend approval of The Varsity; it will now be forwarded to the city council. Detter spoke during public commentary at that meeting.] Detter noted that it was the first project to be reviewed by the newly-established design guidelines board. The board had identified design elements that were present and lacking in the project. The board did a good job, he said. He noted that the review by the design guidelines board is mandatory, but compliance is voluntary. He said the developer did a good job in making improvements to the design.

Detter concluded by saying that the city’s commitment to good building design and public art will make the pedestrian experience better.

New Chair

Bob Guenzel, former Washtenaw County administrator, opened the meeting by saying, “I went away and got elected chair of this group!” He was absent from the board’s Sept. 7, 2011 meeting. Roger Hewitt responded to Guenzel by saying, “That’s how it works, Bob!”

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

Adopting a more serious tone, Guenzel said it’s a great honor to chair the DDA board and said he felt it would be a good year.

On the Horizon

The board’s Oct. 5 meeting included a presentation from DDA planning and research specialist Amber Miller and getDowntown director Nancy Shore on low cost alternatives for evening employees to use on-street parking spaces. At a Nov. 14 joint working session with the Ann Arbor city council, the DDA board will be presenting a proposal to the council for changes to parking rates and policies, which could include extension of enforcement hours past 6 p.m.

The board also received an update on the status of the getDowntown program and the go!pass, which had been presented to the DDA’s transportation, operations and communications committe the previous week. [See Chronicle coverage: "Also Discussed by DDA: getDowntown, Parking"]

Present: Nader Nassif, 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, Nov. 2, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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The city’s negotiating team had previously been insisting 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 withdrawing 16% of gross revenues from the public parking system in each of those years. But the DDA’s 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%.

The city’s chief financial officer, Tom Crawford, said on the flat-16% scenario, he would recommend cutting four police or firefighters this year and two additional police or firefighters next year – the first two years of the proposed parking contract.

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. [For detailed previous coverage: "City, DDA Continue to Talk Parking, Taxes"]

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron St. A more detailed report will follow: [link]