The work will include repairs like displaced bricks and uneven sidewalk flags, as well as pruning of trees.

The money to pay for the work will be drawn from tax increment finance (TIF) revenue, which the DDA is authorized to capture under state statue.

The project was recommended by the DDA’s operations committee. The board vote was unanimous.

This brief was filed from the DDA offices, 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings.

The version of the Chapter 7 ordinance change given final approval by the council would allow for several million dollars in additional TIF capture by the DDA, compared to a different version that had been tabled. The version in front of the council on Nov. 18 set a cap on DDA TIF revenue that will not apply at all until FY 2017 and will result in roughly $6.1 million of TIF revenue to the DDA that year. It will mean an estimated return of $300,000 total to the other taxing jurisdictions in that year.

On Nov. 7, during deliberations when the council gave the change initial approval,  the council also added a requirement that the DDA budget at least $300,000 each year for affordable housing projects, with “affordable” defined as targeting residents with 50% area median income (AMI).

The outcome of deliberations at the council’s Nov. 7 meeting began with a decision to table a version of the Chapter 7 changes that had been under consideration by the council since Feb. 19, 2013.  The council then gave initial approval on Nov. 7 to a different version of the Chapter 7 changes, which were ultimately given final approval on Nov. 18. Those recommendations came from a committee of DDA board members and city councilmembers that has met four times since Aug. 26, most recently on Oct. 30.

The joint committee of councilmembers and DDA board members was established at the council’s July 1, 2013 meeting – after the first version of the ordinance change achieved initial approval at the council’s April 1, 2013 meeting. Representing the council on the joint committee were Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA were Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.

The amount of TIF not captured by the DDA will be proportionally divided among the taxing jurisdictions, which together levy roughly 27.5 mills of taxes in the DDA district. Proportionally, that translates to: city of Ann Arbor (60%), Washtenaw County (21%), Washtenaw Community College (13%), and Ann Arbor District Library (6%).

The $300,000 total to be divided by the other taxing jurisdictions in FY 2017 compares to roughly $2 million that would have been divided among them under the tabled version of the Chapter 7 revision. The tabled version essentially clarified the enforcement of existing language in the ordinance. In both versions – assuming that new construction in the DDA district continues to take place at a healthy pace – taxing jurisdictions would continue to receive additional funds into the future after FY 2017.

Under the change approved on Nov. 18, the city’s share of the estimated $300,000 in excess TIF in FY 2017 will be about $180,000. But that will be distributed proportionally across the city’s funds based on the levy associated with the fund. For example, out of the $180,000, the general fund will get about $65,000. That compares to $430,000 that the city’s general fund would have received based on the tabled Chapter 7 approach.

Although the committee did not put forth a recommendation on governance, the tabled version included various provisions on changes to governance. Those governance revisions included: (1) a two-term limit for service on the DDA board; (2) a prohibition against elected officials, other than the mayor, serving on the DDA board; and (3) service of the mayor on the board (a possibility explicitly provided in the DDA state enabling legislation) subject to annual approval by the city council. If the council did not approve the mayor’s service on the DDA board in a given year, then that spot would go to the city administrator, according to the tabled version.

On Nov. 7, after debating the issue, the council amended the new version to include a limitation on terms. The version given final approval on Nov. 18 will impose a limit of three four-year terms, with additional terms possible only after a four-year lapse.

The council held a public hearing on this item at the Nov. 18 meeting, with nine people addressing the council – including DDA board chair Sandi Smith. Most speakers were supportive of the DDA, although some called for more oversight and equity with other taxing jurisdictions. Deliberations by councilmembers lasted about 30 minutes and included some harsh criticism from Taylor, who called the ordinance change a power play.

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

From left: Consultant Dick Carlisle and Craig Lyon, director of utilities and municipal services for Pittsfield Township, attended the Sept. 16, 2013 meeting of the Ann Arbor District Library board, which was held at the Malletts Creek branch on East Eisenhower. The men gave a presentation on a proposed State Road corridor improvement authority in the township. (Photos by the writer.)

Planning consultant Dick Carlisle and Craig Lyon, director of utilities and municipal services for Pittsfield Township, described the new authority and the roughly $30 million in improvements it would fund between the I-94 interchange and Michigan Avenue. The intent is to create a four-lane boulevard with a median, bike lanes and pedestrian pathway.

The library’s Pittsfield branch is located in the township, and a portion of the AADL district is included in the northern part of the proposed CIA. Under the CIA’s tax increment financing plan, 50% of the increase in taxable value would be captured over a 20-year period to fund the CIA projects. The captured taxes would otherwise go to the entities that levy those taxes. Currently, AADL receives about $8,536 in taxes from taxpayers in the proposed CIA boundaries.

In responding to questions from trustees, Carlisle alluded to ongoing controversy related to the TIF capture by the Ann Arbor Downtown Development Authority. He said that’s why Pittsfield Township is offering to enter into specific agreements with each taxing jurisdiction “that will carefully spell out the limitations on what will actually occur here. So this way, there is no blank check. It is very specific that what we are saying here is exactly what we are going to do.”

A two-year disagreement has persisted over the way the Ann Arbor DDA  calculates its TIF capture, which includes capture of AADL taxes. For the latest Chronicle coverage on this issue, see: “Library View on DDA TIF Capture: Unchanged.”

When the Ann Arbor DDA was formed in the early 1980s, the state enabling legislation for DDAs did not allow for taxing jurisdictions to opt out of participation. However,  CIA legislation includes an opt-out provision. AADL and other taxing entities will have a 60-day period to make that decision. That period is expected to begin when the Pittsfield Township board holds a public hearing about the CIA proposal on Oct. 9.

Based on questions from AADL trustees, they may be skeptical about whether participating in the CIA would be a wise move for the library.

The CIA presentation was the library board’s main agenda item on Sept. 16. The board also reviewed data for the month of August in five categories: Collections, users, visits, usage and participation. In addition, associate director Eli Neiburger presented highlights from the AADL summer game, which wrapped up last month.

During her director’s report, Josie Parker noted that AADL recently released an archive feature on the history of the Ann Arbor Garden Club. It’s part of a broader archiving effort on local history, which includes architecture, cooking, the Ann Arbor police department and several other organizations and topics. Parker said AADL staff would be pleased to talk to anyone who’s interested in archiving the history of other local organizations online.

Parker also told trustees that she’s been invited by the Journal of Library Administration to serve on its editorial board and to write a quarterly column. The journal has historically been limited to administration in academic and specialty libraries, but the new editor and review board wanted to add a public library administrator’s voice to the publication. “I’ve been invited to be that voice, and I’ve accepted,” Parker said.

Items raised during public commentary on Sept. 16 related to a Freedom of Information Act request regarding the 2012 library bond campaign, as well as a plea to renovate the front entrance of the downtown library “from bunker chic to pedestrian friendly.” A topic mentioned at the AADL board’s Aug. 19, 2013 meeting was replacement of the front doors to the downtown library, and possibly undertaking broader renovations at the entrance.

Pittsfield Township Corridor Improvement Authority

Craig Lyon, director of utilities and municipal services for Pittsfield Township, and Dick Carlisle of Carlisle Wortman Associates made a presentation to the AADL board about the township’s proposed corridor improvement authority (CIA) for State Road, south of Ann Arbor.

Carlisle Wortman Associates is the planner for this project, as well as the township’s overall planning consultant. Lyon gave a brief introduction, explaining that the project extends from the I-94 interchange with South State, down through the intersection at Ellsworth and continuing south on State Road to Michigan Avenue. He traced the project’s impetus to 2006, when the Washtenaw County road commission began studying the corridor and determined that there was heavy traffic congestion, and that the road can’t provide the level of service that’s needed. It impacts businesses and residents, Lyon noted. “Going down there at about 4:30 in the afternoon is a lot of fun,” he joked, referring to the congestion at rush hour.

A view showing the northern portion of the proposed corridor improvement authority (CIA) for State Road in Pittsfield Township, starting at the I-94 interchange. The red parcels indicate land that’s developed. Yellow parcels are undeveloped land. (Image links to .pdf file showing entire corridor boundaries.)

Carlisle expanded on details of the project, which would be phased over a 20-year period. South of Ellsworth, State Road currently is two lanes, and has been inadequate for the amount of traffic since well before 2006, he said. It’s a major conduit between Ann Arbor and communities in southern Washtenaw County, including Pittsfield Township and the city of Saline. He noted that part of Pittsfield Township is in AADL’s district. The corridor also is a major center for economic activity that benefits all the taxing jurisdictions, Carlisle said, including AADL. That economic activity could be jeopardized and stifled because of inadequate road infrastructure, he noted.

Most of the township’s major employers are located near State Road, and over 40% of land near the corridor is zoned for businesses, primarily research & development, light manufacturing and other industries that provide “quality jobs” for people in the county, Carlisle said.

The first step in this kind of project is to conduct an environmental assessment, Carlisle said, to qualify the project for federal funding. The environmental assessment identified the preferred design for State Road as a boulevard style – a four-lane road with a central median, similar to the section of Eisenhower Parkway that also intersects with State to the north. The design would also accommodate non-motorized transportation, with bike lanes and a 10-foot pathway for pedestrians. Roundabouts would be added at Morgan, Textile and Old State Street, similar to the roundabout at Ellsworth.

When completed, traffic flow and safety will be improved, Carlisle said, and the corridor will accommodate all types of users, including vehicles, pedestrians, mass transit and bicyclists. He noted that Pittsfield Township has been involved in efforts to try to expand transit options in the county. The improved corridor would also promote economic development, Carlisle said, noting that 40% of the property in that area is now vacant.

The project is estimated to cost $30 million, in 2012 dollars. The challenge for any local government, especially townships, is the fact that townships don’t have a separate funding authority to pay for roads, Carlisle said. To qualify for federal funding, the township has to raise 20% in matching funds, he noted. He said the county road commission won’t invest in road capacity projects like this.

A corridor improvement authority (CIA) is a mechanism to raise the money, Carlisle explained. It would affect the AADL because the library levies taxes on a small portion of the proposed CIA, he said, on the northern end.

The CIA allows the township to raise money through tax increment financing (TIF). The first step to do that is to create a development and tax increment financing plan, which the Pittsfield Township board voted unanimously to receive at its Sept. 11, 2013 meeting. The township board would still need to vote to adopt the plan at a later date. [.pdf of Pittsfield Township CIA development and TIF plan] At that same Sept. 11 meeting, the township board adopted the CIA’s bylaws and rules of procedure. [.pdf of Pittsfield Township CIA bylaws and rules]

The TIF plan establishes a base year – in this case 2013. Eligible taxing jurisdictions would retain all tax revenues from the base year taxable value. By law, a TIF authority could capture 100% of the increase in taxable value over that base year, or it could capture just a portion of that increase. Pittsfield Township is proposing to capture 50% of the increase in taxable value.

AADL board members listen to a presentation about the proposed Pittsfield Township corridor improvement authority (CIA), given by Dick Carlisle and Craig Lyon.

So AADL would keep the amount of taxes in the base year, Carlisle said, plus 50% of any increase in tax revenues that is tied to the increase in taxable value of property in the CIA. This TIF capture would be in effect throughout the 20-year span of the CIA, he said.

The jurisdictions that collect taxes within the CIA boundaries are: Pittsfield Township, Washtenaw County, Washtenaw County parks & recreation, Huron Clinton Metropolitan Authority (metro parks), Washtenaw Community College, Saline District Library, and Ann Arbor District Library.

Any of the jurisdictions have the ability to opt out of the CIA, Carlisle noted. That decision must occur within 60 days of the township’s public hearing on the development and TIF plan. He said the township was sensitive to the fact that other taxing jurisdictions would want as much information as possible in order to make a decision, and that’s why he and Lyon were making presentations in advance of the point at which a decision must be made.

TIF funds can only be spent in the CIA district, and only on projects that are included in the development plan, he said. Pittsfield Township’s plan is very specific and focused just on the roadway and associated improvements, he noted. “There are no hidden projects within this particular proposal,” he said.

The township will hold a public hearing on the CIA on Oct. 9. That starts the 60-day clock for taxing jurisdictions to decide whether to opt out. If the library board takes no action, that means the AADL would be participating for the CIA’s 20-year period.

The AADL would be affected in the following ways, Carlisle said:

• The base year (2013) taxable value for the AADL within the CIA district is $5.507 million.
• Currently, AADL receives about $8,536 in taxes from taxpayers in the CIA boundaries.
• For the CIA’s 20-year duration, AADL would continue to receive its base year tax revenues. For any incremental increase in taxable value, the library would retain 50% of tax revenues. Carlisle estimated that in total over the 20-year period, that would amount to $120,436 for AADL.

Carlisle concluded by reiterating the benefits expected from the CIA: improved traffic operation and increased safety, an accommodation of different modes of transportation, and an increase in economic development that results in increased tax revenues for all jurisdictions.

Pittsfield Township CIA: Board Discussion

Margaret Leary asked for confirmation that the underlying state statue enabling a CIA – as opposed to a downtown development authority (DDA) – allows for a 50% split in tax capture, as well as an opt-out provision. Yes, Carlisle replied. Leary, retired director of the Law Library at the University of Michigan Law School, then asked for the specific statute that enabled the CIA. Carlisle said he didn’t have that information on hand, but he could provide it later. [The statute is Act 280 of the Public Act of 2005.]

AADL trustee Margaret Leary.

Carlisle offered to paraphrase the statute. It states that the CIA can capture all or a portion of the tax increment from the eligible taxing jurisdictions. The statute is also very specific in stating that this is not something that can be imposed on the taxing jurisdictions, he said. “You have the ability to opt out.”

Carlisle also alluded to ongoing issues related to the Ann Arbor DDA. “We’re aware of some of the issues that have occurred elsewhere regarding tax increment financing,” he said. It’s understandable that there are concerns, so Pittsfield Township is offering to enter into specific agreements with each taxing jurisdiction “that will carefully spell out the limitations on what will actually occur here,” Carlisle said. “So this way, there is no blank check. It is very specific that what we are saying here is exactly what we are going to do.”

[By way of brief background, a two-year disagreement has persisted over the way the Ann Arbor DDA  calculates its TIF capture, which includes capture of AADL taxes. For the latest Chronicle coverage on this issue, see: "Library View on DDA TIF Capture: Unchanged."]

Carlisle told AADL trustees that details would be stated in an intergovernmental agreement between the township and each taxing jurisdiction. That agreement is in a draft form for the AADL board, administration and legal counsel to review. [Carlisle did not provide a copy of the draft agreement during the meeting, nor did he have on hand a copy of the draft development & TIF plan. Those were later sent to AADL administration and the board.] [.pdf of draft intergovernmental agreement] [.pdf of draft development & TIF plan]

As a board member, Leary said, she’d like to see such an agreement before she voted on whether to opt out.

Leary also asked for Carlisle’s comments regarding common criticisms of TIFs: (1) that TIFs take money that voters thought would go to AADL, and would allow the CIA to use that money for other purposes without the permission of taxpayers; and (2) that TIFs also take responsibility out of the hands of elected officials, like the AADL board, for determining how that money is spent.

Carlisle argued that the CIA’s TIF wouldn’t be taking responsibility out of the AADL board’s hands, because the AADL board would be entering into an agreement about how the TIF money would be spent. If that agreement isn’t followed, the board would have means to seek remedy, he said. Leary asked what the remedy would be. Anything that’s outlined in the intergovernmental agreement, Carlisle replied.

Lyon explained that the agreement will clearly state that the funds generated through the TIF can only be spent on items identified in the development & TIF plan. The AADL board would have control by making a decision upfront on how the TIF money will be spent over a 20-year period, he said.

Leary then observed that it seemed the remedy, if this agreement is violated, would be for the library to sue the township. Carlisle replied that there could be other means of remedy identified in the agreement, but he did not give any example of what such an alternative might be.

Regarding Leary’s question about taxpayer intent, Carlisle characterized it as the largest philosophical debate surrounding the TIF concept. The question is whether the taxing jurisdictions would receive the benefit of an increased tax base, if the improvement weren’t made. “I would suggest you would not,” he said. As evidence, Carlisle pointed to the Jackson Road boulevard project in Scio Township, which began in 1987. That has resulted in over a 300% increase in taxable value there, he said. He didn’t think anyone would say that the economic development there would have occurred if Jackson Road had remained a two-lane road. “We believe the same thing is going to be true on State Road,” he said.

The nature of the development on State Road will likely be different, Carlisle continued, because it will be more of an employment corridor for high tech and other businesses. But it won’t happen without an improvement to State Road, he said.

AADL trustees Ed Surovell and Nancy Kaplan.

Nancy Kaplan wondered what would happen if not enough of the taxing jurisdictions agree to participate. Carlisle replied that the township board would have to decide whether to continue. That’s one reason why he’s advising the township board not to adopt the development and TIF plan until after the 60-day opt-out period. If there’s not a critical mass of participating jurisdictions, the township board will need to decide if there are enough participants to proceed.

Some of these issues could be covered in the intergovernmental agreement, Carlisle said.

AADL director Josie Parker asked what would happen if it’s just a straight TIF proposal, with no separate intergovernmental agreement. Carlisle said that if the AADL doesn’t opt out, “then you are in.” Responding to another query from Parker, Carlisle said that the law requires a development and TIF plan, and that the plan must identify projects to be paid for with TIF revenues. If the projects are never implemented, “then the law requires that the money is returned to the taxing jurisdictions,” he said.

Leary asked for clarification about the opt-out process. Carlisle explained that the township will hold a public hearing about the CIA on Oct. 9 – the 60-day opt-out period begins at that point. The township board won’t adopt the development & TIF plan until after the opt-out period, but the plan won’t change during that time, he said.

Lyon said that the township board would likely vote to adopt the plan at their Dec. 11 meeting. Between Oct. 9 and Dec. 11, an agreement would be developed between AADL and the township. Starting in 2014, the CIA would capture the TIF revenues. The first phase of construction wouldn’t likely begin until enough funds are accumulated through the CIA, which would probably take 5-6 years, Lyon said.

Prue Rosenthal wondered what would happen if only a couple of the taxing jurisdictions participated. Carlisle replied that the project would have to be scaled back to fit the available financing.

Kaplan asked why the township was pursing the CIA approach, rather than issuing bonds for this project. Carlisle described a TIF as the most equitable way to finance a project that benefits more than just the township. With a bond, it would only be the taxpayers of Pittsfield Township who would pay, he added. He noted that Pittsfield Township will be participating too, in that 50% of its tax revenues within the CIA district will be captured for the project.

Kaplan then asked if Pittsfield Township paid for the environmental assessment. Lyon replied that federal funds helped pay for that.

Leary wondered what other options the township has for raising this money. “Nothing,” Lyon replied. Carlisle added that the township could pay for it with its own tax revenue, “at the peril of all other services.” He reiterated that bonding would require payment by the township’s taxpayers, even though the project would benefit a much broader constituency.

Leary pointed out that the effect would be to raise Pittsfield Township’s tax base. Yes, Lyon said, but it would raise the tax revenues for other taxing jurisdictions too, including AADL. He noted that one of the main differences between Pittsfield Township and the city of Ann Arbor,  or any city, is that the township doesn’t capture any Act 51 (gas tax) dollars from the state. If the township could get Act 51 money, then “the dynamics of this scenario would completely change,” Lyon said.

All of the township’s roads are under the jurisdiction of the Washtenaw County road commission, Lyon explained. And the road commission has indicated that it won’t participate in this project, because it’s a capacity-building project, not a road maintenance project.

Prue Rosenthal, AADL board president.

Parker asked if that was an arbitrary decision made by the road commission. No, Carlisle said, not if you consider the diminished funding that the road commission has received. Like all road commissions in that state, he added, “they’re generally scrambling just to try to maintain what they have.”

Parker got clarification that the road commission does, in fact, have discretion to do this kind of project. Carlisle replied that the road commission could do it, but it would take away from other road improvement projects in the county.

Kaplan wanted to know if the township was going to use the power of eminent domain to take property in order to widen the road. Carlisle said there will be “some necessity for right-of-way acquisition.” However, condemnation is the last resort, he said, although the CIA does have that authority.

When asked who specifically will be making the decisions for the CIA, Lyon replied that the CIA has its own board, which includes the township supervisor, Mandy Grewal. Other members are Claudia Kretschmer (business representative), Roger Jackson (business representative), Bill Linfield (business representative), Bill Reminder (township resident), and David Sarns (business representative), who serves as chair. Lyon is a liaison between the CIA board and the township board, which appointed the CIA board members.

Leary asked when the AADL board could get copies of the interlocal agreement and the development and TIF plan. Carlisle told her that he could provide those the following day. [.pdf of draft interlocal agreement] [.pdf of development & TIF plan]

In describing her view toward the CIA, Leary said she could understand how an entity like the county parks & recreation commission might embrace it, because the CIA’s goals mirror many of the goals in the parks & rec strategic plan, like improving non-motorized transportation and increasing pedestrian access. Therefore, the parks & rec commission has a motive to financially support the CIA, because it would otherwise spend its own money on projects that are part of the corridor improvements.

However, Leary added, “I’m struggling because [the library is] not here to provide transportation.” Leary said she understands how the improvements would benefit AADL and she understands how tax increment financing works. But she was struggling with how to justify taking $120,000 out of the library’s revenues – or whatever the amount will turn out to be. She noted that no one knows how much could be involved, because it depends on the economy and other factors. It would be less than $120,000 – or more. Participating in the CIA would take that money away from books, speakers, building improvements – “all of the things that we were authorized by the voters who elected us to do,” Leary said.

Outcome: This was not a voting item.

Financial Report

Ken Nieman – the library’s associate director of finance, HR and operations – gave a brief report on the August 2013 financial statements included in the board packet. [.pdf of financial statements]

The unrestricted cash balance was $13.75 million as of Aug. 31, 2013. That’s mainly due to the receipt of taxes collected in July. By the end of August, the library had received 65.2% ($7.465 million) of its budgeted tax receipts. [The library's fiscal year starts July 1. Summer property taxes are collected in July.] The fund balance at the end of August was $8.056 million.

Four items are currently over budget but are expected to come back in line as the year progresses, Nieman reported. The over-budget line items are: (1) employment costs related to merit increases; (2) purchased services; (3) communications, for an annual Internet-related payment; and (4) software.

There was nothing out of the ordinary, he concluded.

Financial Report: Board Discussion

Nancy Kaplan pointed out that at last month’s meeting, a member of the public [Lyn Davidge] had asked that explanations be given for any major financial items, such as claims. Kaplan asked Nieman to report on variances for two line items in the budget – materials and LCards/circulation cards. [Materials through Aug. 31 had been budgeted at $145,833 and the actual amount in that line item is $92,210. For LCards, the budgeted amount of $6,000 is unspent so far.]

Nieman said those items reflect timing issues. For materials, more money will be spent later in the year when new releases come out. Spending on LCards usually comes in “big chunks,” he said, because large amounts of library cards are ordered whenever the library is close to running out of them. Orders are typically $5,000. So the amounts can fluctuate, depending on when the need to order arises.

There was no additional discussion, nor any discussion about the August disbursements, which require board approval. [.pdf of August disbursements]

Outcome: The board voted unanimously to approve the August 2013 disbursements.

Director’s Report

AADL director Josie Parker highlighted several items from her written director’s report. [.pdf of September director's report] She noted that associate director Celeste Choate had been invited to make a presentation at the National Institutes of Health Partners in Research 6th annual Clinical and Translational Science Award conference in Bethesda, Maryland. The conference theme was “Science of Community-Engaged Research,” which is something that Choate has been working on for several years, Parker said.

Parker reported that a photo from AADL’s participation in the 2010 Top of the Park will be included in a slideshow by the American Library Association titled “60 Ways to Use Your Library Card,” as part of ALA’s National Library Card month.

Also, AADL has scanned issues of the Ann Arbor Sun, which will be included in Independent Voices, a collection of alternative newspapers, journals and magazines. Independent Voices is published by Reveal Digital, based in Saline. It’s part of a broader effort– including the licensing work that associate director Eli Neiburger described to the board at its Aug. 19, 2013 meeting – to get as much information out to the public as possible, Parker said. It demonstrates what open access can do, she noted, without violating anyone’s copyright.

Parker also reported that on Sept. 11, AADL released an archive feature on the history of the Ann Arbor Garden Club. It’s part of a broader archiving effort on local history, which includes architecture, cooking, the Ann Arbor police department and several other organizations and topics. Parker said AADL staff would be pleased to talk to anyone who’s interested in archiving a local organization’s history online.

Parker told trustees that she’s been invited by the Journal of Library Administration to serve on its editorial board and to write a quarterly column. The journal has historically been limited to administration in academic and specialty libraries, but the new editor and review board wanted to add a public library administrator’s voice to the publication. “I’ve been invited to be that voice, and I’ve accepted,” Parker said. She received a round of applause from the board.

Finally, Parker highlighted a Sept. 5 article in the Michigan Daily by Noah Cohen: “Literati story continues to unfold.” It’s about bookstores and reading, but the article includes the Ann Arbor District Library as part of the conversation, Parker said, “because it’s that important of a place, like bookstores, for readers and reading.” From the article:

Even on dates, since I never had a car, I’d just say, “Meet me in Borders; I’ll be in the young adult section.” That was what downtown meant — Borders, Shaman Drum, Michigan Book & Supply, Dawn Treader, Vault of Midnight, David’s Bookshop and the Ann Arbor Public Library. Not a coffee shop nor a park; not a pub nor an arcade. We had those, but they couldn’t be home base. They didn’t have the magic gravity.

Library Stats

At the board’s Aug. 19, 2013 meeting, trustees had received a briefing on a new format for presenting AADL statistics. On Sept. 16, Eli Neiburger – AADL’s associate director of IT and product development – continued with this approach, providing details in five categories for the month of August: Collections, users, visits, usage and participation. In addition, Neiburger reviewed highlights from the AADL summer game. The data also includes comparisons to August 2012, when available.

AADL collections data: August 2013

AADL user data: August 2013

AADL visits: August 2013

AADL usage data: August 2013

AADL participation data: August 2013

AADL Summer Game data: August 2013

AADL Summer Game data (badge awards): August 2013

Neiburger provided highlights of the statistics from each category, and fielded a wide variety of questions from trustees. In the usage category, for example, 9,592 documents (.pdf files) were downloaded from the AADL website in August 2013, representing a 10.3% increase compared to the previous year. Documents include, for example, full versions of heritage cookbooks in the Ann Arbor Cooks collection – “the things with the squirrel recipes,” Neiburger said.

Ed Surovell, who collects rare books, joked that where he grew up, people still eat squirrels. Neiburger noted that at one point, the library had received a complaint from a member of the public, who felt that the cookbooks “were not being fair to Ann Arbor’s furry friends.” Margaret Leary asked if there were groundhog recipes. Neiburger ventured that there probably were – or he imagined a squirrel recipe would probably work pretty well as a substitute.

Regarding the summer game, AADL director Josie Parker noted that library staff contributes to ideas for “badges,” which can be earned by completing specific tasks and accumulating points. She offered trustees the opportunity to come up with their own ideas for badges next year, if they’d like. “I came up with one, so you can do it too!” she said. Players could earn Parker’s badge – called Josie’s Catfish – by going to her office and finding the game code in the mouth of a stuffed toy catfish.

Outcome: This was not a voting item.

Committee Reports

The board has six committees: communications, budget and finance, facilities, policy, director’s evaluation and executive. Board president Prue Rosenthal reported that none of the committees had met since the August board meeting, so there were no reports.

Public Commentary

During public commentary at the beginning of the Sept. 16 meeting, Don Salberg told the board that he was speaking on behalf of Libby Hunter, who had asked him to read a statement because she couldn’t attend the meeting. She had sent a Freedom of Information Act request earlier in the day asking for emails and all written documents between AADL staff, the board and consultants regarding the 2012 library bond campaign, from Jan. 1, 2012 through Sept. 16, 2013. Salberg read the letter that Hunter had sent to AADL director Josie Parker to make the FOIA request.

Staff and members of the public at the Sept. 16 AADL board meeting, held at the Malletts Creek branch.

Lou Glorie also addressed the trustees. She noted that issues related to the Americans with Disabilities Act (ADA), including projects that might impact accessibility, were discussed at the AADL board’s August meeting. At that meeting, she said, it was reported that the library is largely in compliance with ADA, and that the downtown building is accessible to users with disabilities even in areas where compliance isn’t possible. “But of course, we can do better,” she said. Since it appears that AADL will be making renovations to the downtown library’s entrance, it’s a good time to make that building more accessible.

Glorie hoped that at least one door could be widened, “and the horrible jumble of concrete fronting Fifth Avenue can be made less hazardous.” She urged the board to think about how the multiple levels of the sidewalk along Fifth Avenue would be experienced by patrons with visual impairments – for example, someone who uses a walker who is dropped off in front of the building.

Even if that area is legally compliant with ADA rules, it’s still not easy to use “and is certainly not attractive,” Glorie said. Last month, she noted, Ken Nieman – the library’s associate director of finance, HR and operations – reported that the library had an unrestricted fund balance of $7.8 million. “I’m not saying blow it all on a fancy entrance,” she said, but she hoped the board would think about improving that area of the property to help move that section of Fifth Avenue “from bunker chic to pedestrian friendly.” The sidewalk improvements would likely be paid for by the Ann Arbor Downtown Development Authority, she said, but the library should start the process by incorporating a sidewalk renovation into whatever repairs happen at the entrance.

Glorie also remarked on another issue raised at the August board meeting. She said the board president had needed to formally clarify statements recorded in the minutes. She said she understood that Prue Rosenthal would not want to claim authorship of those comments. It’s often difficult for people to sort through minutes and get things right, Glorie said. One way to avoid this problem is to have the board and committee meetings recorded and broadcast by Community Television Network (CTN), Glorie noted. There would then be an unambiguous record of what was said, and by whom. Openness and transparency benefit not only the public, Glorie concluded, but also governing bodies acting in good faith.

[The clarification to the minutes had been made by Margaret Leary, a former AADL board president, not Rosenthal. Leary was clarifying a section of the minutes that transcribed public commentary from Bob Rorke, who read excerpts from email exchanges that the Protect Our Libraries political action committee obtained through a Freedom of Information Act request. At the time of the email exchanges, Leary served as board president.]

Present: Nancy Kaplan, Margaret Leary, Jan Barney Newman, Prue Rosenthal, Ed Surovell. Also AADL director Josie Parker.

Absent: Rebecca Head, Barbara Murphy.

Next meeting: Monday, Oct. 21, 2013 at 7 p.m. in the fourth-floor conference room of the downtown library, 343 S. Fifth Ave., Ann Arbor. [Check Chronicle event listing to confirm date]

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The city council and the DDA board have a joint committee that is working out details of an alternative to the ordinance amendments that have already been given initial approval by the council.

The initial DDA ordinance revisions that appeared on the council’s Sept. 16, 2013 agenda were awaiting a second and final vote by the council. The amendments to Chapter 7 included various changes to governance, including term limits for board members, as well as clarifications to the existing language on TIF capture. The amendments would have enforced the existing language of the ordinance in a manner that would have impacted the DDA’s TIF revenue in a way roughly matching the DDA’s projected revenues in its 10-year planning document. However, since that 10-year document was last updated, the amount of new construction in the DDA district has resulted in significant increases in the taxable value on which TIF is computed. So about $1 million a year is at stake – which could be distributed to the other jurisdictions whose taxes the DDA captures, instead of being collected by the DDA.

Under the existing ordinance language, the amount of DDA TIF capture is calibrated to projections in the DDA TIF plan, which is a foundational document for the DDA. The different conceptual approach would establish a basis level for the maximum captured taxable value in the DDA district and then set some clearly defined annual increase, keyed to a specific percentage or some variant of a consumer price index (CPI).

For example, the current taxable value on which the DDA captures taxes is roughly $137,000,000. That yielded about $3.76 million in TIF revenue to the DDA in fiscal year 2013, which ended on June 30. If that $137,000,000 were used as a basis for the cap, then a 3% increase applied annually would give the DDA a maximum of $5.063 million in 2023. In any given year, the DDA would receive the lesser of two values: (i) the unconstrained TIF captured on the taxable value; or (ii) the value of the cap.

A working document used by the joint committee at its Sept. 10 meeting showed two basic scenarios, one with a basis of $137,000,000 in taxable value for FY 2013, and a second one starting with a basis of $167,000,000 for the following year, in FY 2014. The second one received more interest from the committee.

The council had postponed a final vote on the changes most recently at its Sept. 3, 2013 meeting. Four months earlier, on May 6, 2013, the council had voted to postpone the final vote until Sept. 3, after giving the changes initial approval at its April 1, 2013 meeting.

Two meetings of the joint committee of DDA board members and city councilmembers have taken place about the ordinance changes – one on Aug. 26, 2013 eight weeks after the committee was appointed, and another one on Sept. 10, 2013.

At the Sept. 10 meeting, the group appeared to be ready to recommend that the council table the initially-approved ordinance changes and start from scratch with a new conceptual approach, likely shedding the proposed changes to governance with the fresh start.

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

(Left) Ward 3 city councilmember Stephen Kunselman. (Right) DDA board member Bob Guenzel.

Now two and a half years later, a solid working relationship between the two entities has evolved – unmarred by political machinations, based instead on a clearly understood shared past, and consensus interpretation of relevant statutes and local laws governing tax increment finance capture.

That has led to a joint working session between the entities scheduled for Sept. 9, 2013. The session will offer an opportunity for members of the organizations to exchange appreciation and praise for the positive turn the relationship has taken over the last 30 months.

Heh. That’s a joke, as is the headline – the only accurate part of the preceding two paragraphs is the fact that a Sept. 9 working session is scheduled.

And it’s fair to say that the working session between the two groups would probably not be taking place unless it were contractually obligated – under an agreement ratified in May of 2011. The DDA operates the city’s parking system under that contract. In addition to the convening of a joint working session every fall, the contract stipulates that 17% of the gross parking revenues are to be paid to the city.

Parking money is just one of the two revenue categories over which the city and the DDA have been bickering. The other is the DDA’s tax increment finance capture (TIF), which is regulated by Chapter 7 of the city code. With an initial approval of changes to Chapter 7 already approved by the council on April 1, 2013, a joint DDA-city council committee was tasked on July 1, 2013 with making a recommendation on Chapter 7 changes to the council.

Aug. 26, 2013 meeting of the DDA-council committee, held in the basement of city hall.

Representing the council on the joint committee are Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA are Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.

Despite being tasked by council on July 1 to begin meeting immediately, the committee did not meet until eight weeks later, on Aug. 26 – after the Aug. 6 city council primaries. Here’s the political calculus: If Kunselman had lost the Ward 3 Democratic primary to Julie Grand, the balance of votes on the council might have shifted to clarifying Chapter 7 in the DDA’s favor.

Grand ran a campaign that was generally supportive of the DDA. But Kunselman has led the council’s effort to clarify Chapter 7 in a way that favors the city as well as the other taxing jurisdictions whose taxes are captured by the DDA. However, Kunselman prevailed – as did Ward 4 challenger Jack Eaton, who campaigned in part on the idea of limiting the DDA’s TIF capture through clarification of Chapter 7.

Because the committee waited until after the Aug. 6 primary to meet, the DDA members had a clearer idea on Aug. 26 about who they’d be dealing with in the near future. The outcome of the Aug. 6 primary meant that Kunselman brought a certain amount of confidence to the committee meeting on Aug. 26. At one point he stated: “… I don’t really have a lot of trust out in my neighborhoods about what the DDA does downtown, ok? And that’s how I have been able to galvanize my base, so to speak, to stay here and to keep this effort alive, so that we can get this ordinance changed … Some of that money, yes, should be returned to the taxing authorities.”

Now the only question mark on the committee is the independent Lumm, who faces a challenge from Democrat Kirk Westphal in the November election. Lumm has made it clear she supports a Chapter 7 revision that respects the interests of the other taxing jurisdictions. But Lumm’s re-election is not a foregone conclusion.

That’s why the opening gambit from the DDA’s side at the Aug. 26 meeting was to delay further, even though the council is scheduled to take a final vote on the Chapter 7 revisions at its Sept. 16 meeting. A future council that included Westphal, mayor John Hieftje, Chuck Warpehoski (Ward 5), Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Sabra Briere (Ward 1) might have six votes that potentially could support the current approach to TIF calculations. But among those six, I think even Westphal, Warpehoski and Briere are capable of independent and rational thought on the question of TIF capture.

The delaying tactic on Aug. 26 emerges in a fairly obvious way if you read through the meeting transcript. [.pdf of 40-page transcript]. DDA members were more inclined to want to talk about general arguments for the existence of a DDA, professing uncertainty about why they’d even been invited to the table. Kunselman, Lumm and Petersen made it clear they were there to talk about clarifying the TIF calculations, not more general themes. It wasn’t clear whose interests Taylor was upholding, but he aligned himself policy-wise – as well as socio-linguistically – more with other DDA board members than with his city council colleagues.

The Aug. 26 meeting was highlighted by a number of misstatements or incomplete statements of historical fact – some serious enough that I worry about the ability of some of those at the table that day to effectuate good public policy.

Still, I think the meeting offered a glimmer of hope – from a guy whose history with the city of Ann Arbor is approaching an anniversary. On Sept. 15, city administrator Steve Powers will have been on the job exactly two years.

Powers, I think, offers a contrast with the previous city administrator Roger Fraser. On April 16, 2010 Fraser barred me from a meeting of a “working group” of councilmembers and DDA board members. Shielded from public view, the group was sorting out the terms of a new parking agreement. Powers, on the other hand, toward the end of the Aug. 26, 2013 committee meeting, had this to say: “If the committee is done commenting, you should provide for public comment, as it’s a public meeting.”

This column includes a brief outline of some factual points worth remembering – because they were misstated or incompletely stated at the Aug. 26 meeting. But first, a point about words. 

Word Usage: Who’s the Attorney?

Even if you haven’t studied it in school, you probably have an awareness of how vocabulary choices can establish credentials, or let other people know that you are one of their kind.

For example, if I say by way of introduction to an urban hipster on a fixed-gear bicycle, “Is that a 44/16 you’re pushing?” that can be translated as follows:

Hey, I would like to make small talk about bicycles, and I know that 44/16 is a gear ratio, so tell me the answer to my question, before I size you up as just a poser who rides a fixie for the hip and groovy look, but doesn’t even know the first thing about gear combinations.

So early on during the Aug. 26 committee meeting, Ward 3 councilmember Christopher Taylor held forth as follows:

Taylor: … I think the ordinance as currently constituted is not clear to the novice 1-L looking at it, and [I] wouldn’t mind an ordinance that was.

What the 1-L?! If you remember the movie “The Paper Chase,” or if you can deduce it from your knowledge of Taylor’s background as an attorney, you might have a shot at understanding the reference – to a “first-year law student.” It seems to be a naming pattern unique to law schools. For example, first-year medical students are not 1-Ms. First-year journalism students are not 1-Js. In any case, Taylor’s reference was not universally and immediately understood by all the other non-lawyers in the room.

I think Taylor is bright enough to know that “1-L” is parlance peculiar to a specific social class. So why use a term that he could reasonably expect would not immediately be accessible to everyone in the room? One reason could be that Taylor was not the only lawyer at the table: Joan Lowenstein and Bob Guenzel – members of the DDA board – are also attorneys. So Taylor’s reference to 1-L could be translated as:

Hello, Joan and Bob, I see you lawyers over there, so let us note that we are the lawyers here –  we are us and they are them – and once again, lest anyone forget: We are the lawyers.

Earlier in the meeting, Lowenstein had tried to put Kunselman in his place with respect to his legal understanding of the contractual nature of the parking agreement between the city and the DDA:

Kunselman: … we can get rid of the parking agreement and take it back.
Taylor: Yes, it’s an agreement but …
Kunselman: … yet we can take it back. [laugh]
Taylor: It’s an agreement between two entities …
Lowenstein: … it’s a contract. Anyway, we won’t educate you about contract law, but go ahead.

A pertinent point about that parking contract, not mentioned by any of the three lawyers present, is the opportunity for terminating it, even when there’s been no breach. Everyone present at the committee meeting with knowledge of the contract was eager to state that the contract runs through the end of the DDA’s charter, in 2033. But apparently forgotten, even by the lawyers present, was the clause that allows either the DDA or the city to terminate the contract in year 11, with one year’s notice:

Each of the City and DDA may terminate this Agreement without cause, on June 30, [2022] and on the eleven (11) year anniversary thereafter, provided that written notice of termination is provided no less than three hundred and sixty five (365) days in advance of said termination.

Myth of Transparency

The transcript of the Aug. 26 meeting reflects a sharp exchange between Kunselman and Taylor on the question of whether the negotiations leading up to ratification of the May 2011 parking agreement were open and transparent. Taylor was adamant that the agreement on the parking contract had been reached in an open way and had not been passed in the “dark of the night.” Kunselman contended that the public conversation took place only after the decisions had been made out of public view.

For some grounding in actual fact, it’s worth noting that after a council-DDA “mutually-beneficial” committee was re-established on May 17, 2010, the conversations between the two bodies on the parking agreement moved at least in part into the public realm. I attended most of those meetings.

Before that, however, the conversation between the city council and the DDA was shielded from public view. Here’s a timeline overview. The April 16, 2010 date is worth noting.

• Jan. 20, 2009: City council passes a resolution asking the DDA to begin discussions of renegotiating the parking agreement between the city and the DDA in a mutually beneficial way.
• March 4, 2009: DDA board establishes a “mutually beneficial” committee to begin discussions of the parking agreement between the city and the DDA. On the committee: Roger Hewitt, Gary Boren, Jennifer S. Hall, and Rene Greff. The DDA’s resolution establishing their committee calls on the city council to form its own committee.
• May 20, 2009: During the mid-year DDA retreat, mayor John Hieftje states publicly that city councilmembers object to the membership of Jennifer S. Hall and Rene Greff on the DDA’s “mutually beneficial” committee.
• June 3, 2009: DDA board chair Jennifer S. Hall removes herself from DDA’s “mutually beneficial” committee, replacing herself with Russ Collins.
• June 15, 2009: Mayor John Hieftje nominates councilmembers Margie Teall (Ward 4), Leigh Greden (Ward 3) and Carsten Hohnke (Ward 5) to serve on the city council’s “mutually beneficial” committee, and they’re confirmed at the city council’s July 20 meeting.
• July 1, 2009: DDA board chair Jennifer S. Hall appoints Sandi Smith to replace outgoing DDA board member Rene Greff (whose position on the board is filled with Newcombe Clark) on the DDA’s “mutually beneficial” committee. Smith is also a city councilmember, representing Ward 1.
• August 2009: Leigh Greden is defeated in the Democratic primary by Stephen Kunselman.
• August-December 2009: Sandi Smith, the chair of the DDA’s “mutually beneficial” committee, reports at each monthly DDA board meeting that there is nothing new to report.
• Dec. 5, 2009: Dissolution of the DDA is included in an “everything is on the table” list for discussion at the city council’s budget retreat.
• January-April 2010: Roger Hewitt reports at monthly DDA board meetings that only informal discussions are taking place.
• April 16, 2010: The Ann Arbor Chronicle is barred from attending a meeting of a “working group” of city councilmembers and DDA board members.
• April 21, 2010: At a DDA partnerships committee meeting, Newcombe Clark gets assurance that a 7-day notice would be given before the full board would be asked to consider a $2 million transfer payment to the city.
• April 28, 2010: At a DDA operations committee meeting, a “term sheet” produced by the “working group” of the city council and DDA is unveiled. It’s intended to become the basis for an eventual new parking agreement. A key feature of the “term sheet” is that the DDA will assume responsibility for enforcement of parking meters. That responsibility was not ultimately included in the final agreement.

Myth of the Debt Clause Interpretation

The transcript of the Aug. 26, 2013 meeting reflects a claim that the DDA as an institution took on bonding debt, based on a particular interpretation of the Chapter 7 “debt override” clause. That interpretation is that as long as the DDA has debt obligations, it does not owe a return of any excess to the other taxing jurisdictions.

Hewitt: So I just want to be clear that you want to remove that ["debt-override"] clause completely?
Kunselman: Yes, which has already been done in the first reading.
Hewitt: But understanding that we have engaged in a huge amount of indebtedness based on that.

The last bonds for which the DDA accepted the debt service obligations were approved by the city council in February 2009. Later in the meeting, Hewitt returned to the implicit point – that historically, the debt clause had always been given the interpretation the DDA is currently giving it. That interpretation is that if the DDA had debt, then no excess TIF revenue needed to be returned to the other taxing jurisdictions:

Hewitt: Just to move things forward, I think, one of the big issues is that debt clause. The DDA and previous councils have operated under the assumption that the debt clause meant that there would be no refund because there was debt. That’s certainly how the DDA has viewed that. And the discussions with previous councils, that’s clearly how previous councils have viewed that. Now if you want to change, if you want to clarify that so that it does not apply, then I would like to hear from council that that is what you would like to do, because that would be a first step towards clarifying the ordinance.

And Taylor lent his support to the idea that the debt clause had consciously been given a specific interpretation over the years [emphasis added]:

Taylor: … Yes there is a debt override, and yes, there is a confusing way of creating a refund mechanism. The DDA has made pledges with respect to debt such that the refund mechanism has not frequently been triggered.

As a matter of historical fact, however, to the extent that the DDA or the city council has ever expressed a position on the “debt clause,” that implicit position has been that the clause does not excuse the DDA from returning excess TIF capture to the other taxing jurisdictions. In more detail, the DDA’s narrative in the spring of 2011 – when the Chapter 7 issue arose – was that the DDA had been unaware of the implications of Chapter 7 on its TIF revenue. However, once alerted to Chapter 7 by the city treasurer at that time, the DDA took 18 days to study the question before concluding that the return of excess TIF was owed to other taxing authorities – dating back to previous years, not just 2011.

Only when challenged on the methodology of its calculations, which made a difference on the order of $1 million per year, did the DDA reverse its position – by citing the “debt clause” of Chapter 7. The clause is most naturally read as a requirement that debt obligations be satisfied before non-debt obligations – like administrative staff salaries. The DDA’s preferred interpretation – that the clause lifts a stated restriction on TIF revenue already expressed in the ordinance – just isn’t plausible.

The fact that the DDA did not cite the debt clause in the spring of 2011 – when it made repayments of excess TIF covering that year and prior years – indicates that the DDA did not then, or in years before that, think the debt clause had an available interpretation under which the excess TIF return obligation could be excused.

The timeline, which undercuts the implications of statements made by Hewitt and Taylor at the Aug. 26 committee meeting, is as follows:

• 2011-April-28: City of Ann Arbor chief financial officer Tom Crawford steps in as interim city administrator in the wake of Roger Fraser’s departure.
• 2011-April-29: City financial staff notice the implications for TIF capture that are written into the city’s 1982 ordinance, which established the DDA. The timing of the discovery was reported by mayor John Hieftje at the DDA board’s May 2 meeting. In summary strokes, the ordinance provides that if the rate of growth in taxable value is more than what was anticipated in the TIF plan, then the DDA would capture only half of the increment on that additional value.
• 2011-May-02 (noon): The Ann Arbor DDA board was expected to ratify its side of the contract with the city of Ann Arbor under which it would continue management of the city’s parking system. Instead, it was announced that the board would be tabling the vote on the parking contract pending a closer review of the excess TIF capture issue.
• 2011-May-02 (7 p.m.): Ann Arbor city council strikes the city-DDA parking contract approval from its agenda.
• 2011-May-16: Ann Arbor city council begins its second meeting in May, at which it must approve the FY 2012 budget. The council does not vote on the budget, but recesses the meeting until May 23.
• 2011-May-20: At a special meeting, the Ann Arbor DDA board approves a parking contract with the city of Ann Arbor that provides 17% of gross parking revenue to the city of Ann Arbor. The approved contract includes a provision that the city of Ann Arbor will backstop the DDA’s financial position if the DDA’s fund balance falls below $1 million.
• 2011-May-20: At the same meeting, the Ann Arbor DDA board votes to affirm the excess TIF calculations raised at the May 2 meeting. The DDA calculates that a total of $1,185,132 should be returned to taxing authorities that levy property taxes in the downtown district. The city of Ann Arbor’s share of that is $711,767, with the remaining money owed to the Ann Arbor District Library, Washtenaw County and Washtenaw Community College. The method of calculation is “year-to-year” not cumulative, and is based on the “optimistic” projections in the DDA’s TIF plan.
• 2011-May-23: City council convenes the continuation of its May 16 meeting, but immediately recesses, likely in order to prevent any discussion of a proposal from Stephen Kunselman (Ward 3) to return responsibility for the public parking system from the DDA to the city of Ann Arbor’s public services area.
• 2011-May-25: “Mutually beneficial” committees from the city council and the DDA board meet and finalize language on fund balance underwriting and required consultation with the city council on rate changes in the proposed parking agreement.
• 2011-May-31: Ann Arbor city council votes to waive the $711,767 in excess TIF capture that the DDA calculated it owed to the city of Ann Arbor.
• 2011-May-31: At the same meeting, the Ann Arbor city council ratifies the city-DDA parking contract, which provides 17% of gross parking revenue to the city of Ann Arbor. The approved contract includes a provision that the city will backstop the DDA’s financial position if the DDA’s combined fund balance falls below $1 million.
• 2011-July-27: At a special meeting, the DDA convenes in closed session and emerges to approve a resolution that reverses its previous position on excess TIF capture. Now the DDA contends that the local ordinance doesn’t actually place a limit on its TIF capture.
• 2011-August-15: Ann Arbor District Library board holds a closed session as part of its regular meeting to review the written legal opinion of its legal counsel with respect to the excess TIF capture. AADL board director Josie Parker indicates that the AADL will ask its legal counsel, Hooper Hathaway, to prepare a response to the DDA’s new position on the interpretation of the ordinance.
• 2011-November-02: Ann Arbor DDA holds a closed session to review the written opinion of its legal counsel on the issue of excess TIF capture.
• 2011-December-07: Ann Arbor DDA holds a closed session to review the written opinion of its legal counsel on the issue of excess TIF capture.
• 2012-Mar-19: Ann Arbor District Library director Josie Parker tells The Chronicle that AADL is not pressing the matter of the excess TIF, but is open to a conversation with the DDA.
• 2012-Mar-19: Stephen Kunselman (Ward 3) announces he’ll be bringing forward a resolution to address the issue of excess TIF capture. Kunselman has not consulted with AADL on the issue.
• 2012-Mar-21: During a budget update at the Washtenaw County board of commissioners meeting, the $348,000 received by Washtenaw County from the DDA in TIF reimbursement is presented as one of several factors contributing to the better-than-expected financial condition for the county.

Myth of the Opt Out: Other Taxing Jurisdictions

The DDA captures some of the taxes of other jurisdictions  – the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. The current state enabling legislation for DDAs includes an opt-out provision for other taxing jurisdictions. So there’s a widespread misunderstanding that back in the early 1980s when the Ann Arbor DDA was established, other jurisdictions had an opportunity to opt out.

However, as The Chronicle has previously reported, that provision in the state statute was added after the Ann Arbor DDA was established. And when the Ann Arbor DDA was renewed in 2003, none of the opt-out conditions were triggered. So there has never been an opportunity for other taxing jurisdictions to opt out.

The Aug. 26 committee meeting revealed a lack of command of these historical facts by Taylor, when he ventured that the other taxing jurisdictions had “signed up for it” – that is, not chosen to opt out of the Ann Arbor DDA’s tax capture. [emphasis added]:

Kunselman: I don’t feel good just because I can take someone else’s money, and keep it.
Taylor: I guess: They signed up for it.
Kunselman: Well, the library didn’t. They would like some of their money back.
Taylor: And they haven’t come to us to say that they ..
Kunselman: … they wrote us a letter. They wrote [mayor John] Hieftje a letter.
Taylor: In 2000-what?
Kunselman: What, two years ago? [It was January 2012 when the letter was written.]

Coda

I’ve been told by one public official that it’s not their job to give a correct recitation of history – because that’s The Chronicle’s job. If you’d like to watch the city council and the DDA board make a small bit of history tonight, you can watch live proceedings on Channel 16, streamed online by Community Television Network.

The council-DDA work session will immediately follow a special meeting the council is convening at 7 p.m. to hold a closed session under the Michigan Open Meetings Act – to discuss labor negotiation strategy.

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of public bodies like the Ann Arbor Downtown Development Authority and the Ann Arbor city council. Click this link for details: Subscribe to The Chronicle. And if you’re already supporting us, please encourage your friends, neighbors and colleagues to help support The Chronicle, too!

Ann Arbor DDA TIF revenue projections. The vertical line indicates the year when the clarified calculations would be implemented. The red line is the amount of TIF revenue assumed by the DDA in its FY 2014 and FY 2015 budgets, and in its 10-year planning document. The blue line is the estimated TIF revenue under the proposed clarified ordinance calculations. The yellow line is the estimated TIF revenue that the DDA would receive if the DDA continued to interpret the city’s ordinance in its own way. (Numbers from the city of Ann Arbor and DDA. Chart by The Chronicle.)

A joint council-DDA committee was appointed on July 1, 2013 with a charge to begin meeting immediately to work out a recommendation on possible legislation that would clarify the ordinance. However, that committee did not convene until eight weeks later, on Aug. 26. The committee met on just that one occasion before the Sept. 3 council meeting. The postponement until Sept. 3 had come at the council’s May 6, 2013 meeting.

The council had given initial approval of an ordinance change at its April 1, 2013 meeting. The change would clarify the existing language in the ordinance – which outlines how the DDA is supposed to return excess TIF revenue to other taxing jurisdictions – to the extent that the revenue exceeds projections in the DDA’s TIF plan.

Until two years ago, the existing limitation expressed in the ordinance had never been applied. But in May 2011, the city treasurer called the issue to the DDA’s attention, characterizing it as a roughly $2 million issue, dating back to 2003. However, when the DDA retroactively calculated its revenue, as well as rebates to other taxing jurisdictions, it applied a methodology chosen to minimize the amount of “rebate” owed to other taxing jurisdictions, reducing the amount to roughly $1.1 million.

When challenged on its method of calculation, the DDA subsequently changed its position, claiming that the money it had already paid back to other taxing jurisdictions was a mistake. The DDA’s new position was to claim an interpretation of a clause in Chapter 7 as providing an override to limits on TIF revenue – if the DDA has debt obligations, which it does. So in 2012 and 2013, the DDA did not return any of its TIF capture to other taxing authorities. In addition to the city, those taxing authorities are the Ann Arbor District Library, Washtenaw County, and Washtenaw Community College.

The proposal as approved at first reading by the council on April 1, 2013 would essentially enforce the language that is already in the ordinance, but disallow the DDA’s interpretation of the “debt override” clause. Compared to the DDA’s own 10-year planning document, revenue to the DDA under the ordinance change would be roughly similar. The minimal impact compared to the planning document depends on the enactment of the ordinance to apply beginning with fiscal year 2015. However, the 10-year planning document in question did not include a large amount of new construction in the downtown area, which has already generated higher TIF revenue than estimated in the 10-year plan.

The ordinance revision as approved at first reading also includes term limits for DDA board members, and would make the appointment of the mayor to the board of the DDA contingent on a majority vote of the council. Without majority support, the mayor’s spot on the board would go to the city administrator.

Serving on the joint council-DDA committee for the council are: Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Sally Petersen (Ward 2) and Jane Lumm (Ward 2). Representing the DDA are Sandi Smith, Joan Lowenstein, Bob Guenzel, and Roger Hewitt.

The Aug. 26 committee meeting was dominated by political squabbling. The only substantive concept that was batted around briefly at that meeting was the idea of defining some kind of fixed cap on TIF revenue. This approach would replace the existing ordinance language, which calibrates the DDA’s TIF capture with projections in the TIF plan. But the discussion never went as far as to include dollar amounts for the fixed cap.

Deliberations at the Sept. 3 council meeting were relatively scant, consisting primarily of the date to which the item would be postponed.

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

Other board officers elected included John Mouat as vice chair, Keith Orr as secretary, and Roger Hewitt as treasurer.

One of Smith’s first challenges leading the board will be to resolve an outstanding issue over the way the DDA administers Chapter 7 of the city code of Ann Arbor – which regulates the DDA’s tax increment finance (TIF) capture. An effort led by Ann Arbor city councilmember Stephen Kunselman (Ward 3) – which has taken different forms over the last year and a half – culminated earlier this spring in initial approval by the council of a revision to Chapter 7. The council’s action, if given final approval, would prevent the DDA from giving the code an interpretation that doesn’t recognize a cap on TIF revenue expressed in Chapter 7. The amendment to the ordinance would return several hundred thousand dollars a year to the other taxing authorities from which the DDA captures taxes. Those entities include the Ann Arbor District Library, Washtenaw Community College, Washtenaw County and the city of Ann Arbor.

The council has postponed final action on the matter until Sept. 3, 2013. Between now and then, the council’s expectation is that a joint DDA-council committee will meet and make recommendations on the Chapter 7 issue.

At its July 1 meeting, the city council appointed four members to its committee: Christopher Taylor (Ward 3), Stephen Kunselman (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). And two days later, on July 3, outgoing DDA board chair Leah Gunn appointed Bob Guenzel, Roger Hewitt, Joan Lowenstein and Sandi Smith to the DDA’s committee.

Gunn’s current term on the DDA board expires on July 31 this year.

At the board’s July 3 meeting, the board bid farewell to Gunn and Newcombe Clark, whose term is also expiring at the end of July. First appointed in 2009, Clark served one four-year term. He’s making an employment-related move to Chicago.

Gunn served for nearly 22 years on the board starting in 1991. In 2011 she announced she would not to seek re-election in 2012 to a seat on the Washtenaw County board of commissioners. She had first been elected as a county commissioner in 1996. After redistricting of the county board seats, she decided to support fellow Democrat Yousef Rabhi, who was re-elected and now serves as chair of the Washtenaw County board. In her professional life Gunn served as a librarian in the University of Michigan graduate and law libraries.

The second term for Russ Collins is set to expire on July 31, with those of Gunn and Clark. However, Collins was nominated at the city council’s July 1 meeting by mayor John Hieftje for reappointment to the DDA board.

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

The council will be represented by Christopher Taylor (Ward 3), Sally Petersen (Ward 2),  Stephen Kunselman (Ward 3) and Jane Lumm (Ward 2). Lumm’s name was added to the mix during the council’s meeting.

The current source of friction between the DDA and the city concerns the interpretation of Chapter 7 of the city code, which regulates the DDA’s tax increment finance (TIF) capture. The DDA has chosen to interpret the Chapter 7 language in a way that does not recognize the cap on TIF revenues that is set forth in Chapter 7. That led to a proposal by some councilmembers earlier this year to revise the ordinance so that the DDA’s alternate interpretation is clearly ruled out. The council gave the ordinance change initial approval on April 1, 2013. But later, on May 6, 2013, the council chose to postpone the vote until Sept. 3, the council’s first meeting that month.

In the memo accompanying the council’s July 1 resolution, the group – which was described as a “mutually beneficial” committee – is tasked with coming up with a recommendation for Chapter 7 revised language with a deadline of Sept. 2. During the meeting, the name of the committee was changed from “mutually beneficial” to simply a “joint DDA-council committee.”

The phrase “mutually beneficial” in connection with the sorting out of issues between the city of Ann Arbor and the Ann Arbor DDA was first mooted in a Jan. 20, 2009 resolution. The main issue at that time was the contract under which the DDA administers the city’s public parking system. Subsequently, committees for both organizations were appointed, but they did not achieve any results. The following year, new “mutually beneficial” committees were appointed and those committees met over the course of several months, culminating in a new parking agreement ratified in May 2011. The council formally disbanded its “mutually beneficial” committee at the end of 2011.

Responding to an emailed query from The Chronicle, current DDA board chair Leah Gunn indicated she would wait until the council passed its resolution before making public the names of the DDA board counterparts.

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

Mayor John Hieftje at the April 15 Ann Arbor city council meeting. (Photos by the writer.)

Conversation amongst audience members at the meeting – as well as subsequently in the community – described the effort as a “citizens filibuster.” The result of all the commentary: Two significant items on the agenda were postponed until the council’s May 6 meeting.

One of those items was the site plan approval for 413 E. Huron. Postponement of a decision on that project was lumped in with the general motion to postpone all remaining action items on the agenda until May 6. It was not necessarily expected that the council would postpone the 413 E. Huron site plan that evening, even if it was hoped by opponents that councilmembers would put off the decision – for a third time.

But there was a reasonable expectation that another significant item would be postponed – the council’s final action on a proposed revision to the city ordinance governing the Ann Arbor Downtown Development Authority. It was during the often acrimonious debate on that decision that the council ultimately opted to postpone all of its remaining action items until May 6.

The acrimony stemmed in part from the fact that the stated intention of Stephen Kunselman (Ward 3) at the start of the meeting was to postpone a final decision – and that was the expected outcome. The fact that this expected outcome was called into question heightened the tension in an already emotional debate. The tension was heightened by the fact that deviation from the anticipated postponement was made possible mainly by the absence of two councilmembers – Marcia Higgins (Ward 4) and Sumi Kailasapathy (Ward 1).

By the time the council reached the DDA ordinance on its agenda, the hour was approaching 2 a.m. And by then Higgins and Kailasapathy had needed to leave the council meeting. Both of them had supported the ordinance changes in the 7-3 vote taken at the council’s April 1, 2013 meeting. But for the final reading on April 15, neither of them were at the table when the debate on the DDA ordinance began.

Kailasapathy described herself to The Chronicle as on the verge of physical exhaustion when she left – having had little sleep over the several days leading up to the meeting. She earns her livelihood as a certified public accountant, and tax season is a time of peak workload.

So apparently recognizing that the absence of Kailasapathy and Higgins would mean defeat for the ordinance change – if it were voted up or down, instead of being postponed – mayor John Hieftje led an effort to force an up-or-down vote on the issue. And councilmembers who were willing to put off the issue were not unified in their view about the parliamentary procedure to use to achieve that delay. So the council voted on two different options – postponing until a date certain (June 17) or tabling the issue. Sabra Briere (Ward 1) provided a crucial vote against postponement, but voted in favor of tabling.

Kunselman argued for the postponement by pointing out that because the sequence of the roll-call vote that evening allowed him to vote last, he could simply assess how the tally stood, and vote accordingly with the prevailing side. That would give him the right to bring back the vote for reconsideration at the council’s subsequent meeting. But Kunselman’s argument was not persuasive to a six-vote majority.

Without a six-vote majority in favor of either tabling or postponing, the council was left to deliberate on the actual ordinance amendments. As some attempted amendments failed – clearly due to the dynamic that had resulted from the absence of two councilmembers – Chuck Warpehoski (Ward 5) eventually proposed adjourning the meeting until the following Monday, when the meeting could continue. However, after a brief recess it was decided that the council would simply postpone all remaining voting items until its May 6 meeting, and put an end to the April 15 meeting.

After approving the motion to postpone the action items, councilmembers ticked through the remaining “housekeeping” items on the agenda, which largely included various reports and communications. Of those, one highlight worth noting was the nomination by Hieftje of Eric Mahler to replace David Nacht on the board of the Ann Arbor Transportation Authority.

The public commentary at the April 15 meeting exceeds The Chronicle’s capacity to report in its customary way. Still, some accounting of the meeting is important for the archives.

This report provides: (1) a summary of votes taken; and (2) a summary of actions that will now appear on the May 6 agenda as a result of the April 15 postponement. In addition, this report begins with details of the deliberations on the proposed DDA ordinance revisions.

DDA Ordinance Revisions

During the April 15 meeting, the council undertook some amendments to the proposed ordinance revisions governing the Ann Arbor Downtown Development Authority. [.pdf of DDA ordinance as it will appear on the council's May 6, 2013 agenda] Background is presented first, followed by details of the deliberations.

DDA Ordinance Revisions: Background

Several revisions to Chapter 7, a city ordinance governing the Ann Arbor DDA, had received an initial approval by the city council at its April 1, 2013 meeting. The revisions would result in roughly $500,000 in additional annual revenue for the city of Ann Arbor – compared to what it would receive under the DDA’s current interpretation of the ordinance.

The revisions ultimately postponed by the council on April 15 fell roughly into two categories: (1) those involving board composition and policies; and (2) calculation of tax increment finance (TIF) capture in the DDA district.

In the first category, the revisions to Chapter 7 that have received initial approval by the council included: a new prohibition against non-mayoral elected officials serving on the DDA board except by agreement with the other taxing jurisdictions; term limits on DDA board members; and a new requirement that the DDA submit its annual report to the city in early January.

More significantly, the changes include revisions to Chapter 7 that would clarify how the DDA’s TIF tax capture is calculated. While the interpretation of the language is disputed, it’s generally acknowledged that the ordinance language doesn’t provide explicit and clear guidance on the calculations.

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 ordinance revisions 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. The result of the clarification to the Chapter 7 language would mean in the neighborhood of $300,000 less TIF revenue for the DDA in FY 2014 – compared to the $3.933 million shown in the DDA’s adopted budget for that year. For FY 2015, the gap between the DDA’s budget and the projected TIF revenue – using the proposed clarifying change to Chapter 7 – would be around $70,000 according to one projection.

However, the total increment in the district on which TIF is computed has shown significant growth. And under the proposed clarification of Chapter 7, that growth would result in a return of TIF money to other taxing jurisdictions (that would otherwise be captured by the DDA) totaling $931,000 each year for FY 2014-15. The city of Ann Arbor’s share of that would be roughly $500,000, of which about $300,000 would go into the general fund. The city’s general fund includes the transit millage, so about $60,000 of that would be passed through to the Ann Arbor Transportation Authority.

The amount of TIF capture that’s returned to the other taxing jurisdictions is tied to growth in the valuation by the Chapter 7 language. Under Chapter 7, 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. In 2011, the DDA for the first time returned excess TIF capture to other authorities, when the existence of the Chapter 7 language was reportedly first noticed. At that time, the DDA made repayments of TIF monies to other authorities of around $400,000, which covered what was owed going back to 2003. When the DDA calculated the amounts owed in 2011, the city of Ann Arbor waived its roughly $700,000 share.

In 2011, the DDA used a year-to-year interpretation of the Chapter 7 language instead of computing rate of growth against the base year in a cumulative fashion. That is a point that the Chapter 7 revisions would clarify.

Before giving initial approval on April 1, but postponing its vote on April 15, the council had previously postponed voting at its March 18, 2013 and March 4, 2013 meetings.

DDA Ordinance Revisions: Financial Impact

Some of the discussion has focused on what the impact of the ordinance clarifications would be on the DDA’s finances. Chart 1 below summarizes the impact. As amended at the April 15, 2013 meeting, the impact of the clarification would not be felt until FY 2015. From FY 2015 forward, the difference between the revenue planned for by the DDA (red) and that provided by the calculations made explicit in the ordinance revisions (blue) is minimal. What’s at stake is the TIF revenue level for which the DDA has not been planning – shown by the yellow line. That level of revenue has resulted from recent new construction in the downtown area.

Chart 1: Impact on DDA finances compared to DDA 10-year planning document. Data from city and DDA sources, chart by The Chronicle.

[.pdf of DDA 10-year planning document]

DDA Ordinance Revisions: Initial Communications

During the initial slot on the agenda set aside for communications from councilmembers, Stephen Kunselman (Ward 3) indicated he would be asking his colleagues for postponement of the vote regarding changes to the DDA ordinance. His remarks came about an hour into the meeting. He said the reason he was asking for the postponement was that after the council’s initial approval of the ordinance changes on April 1, there had been a lot of misrepresentation about what the changes meant.

There had also been political intimidation, Kunselman said, and “outright character assassination” of those councilmembers who had been trying to work hard to bring clarity to the DDA TIF calculation process. “I’ve always intended that the DDA budget be maintained whole,” he said, so that the DDA could still meet existing obligations. During the deliberations on that initial vote, he pointed out, the threat had been heard that the DDA board might rescind its resolution that granted $8 million to the city of Ann Arbor – paid in installments of roughly a half million dollars each year – for the new police courts building/Justice Center.

There had also been reports in the press, Kunselman stated, that DDA board treasurer Roger Hewitt had indicated there would be no “sacred cows” when it came to the DDA’s reevaluation of its budget. Kunselman said he had interpreted Hewitt’s remarks as a threat. Kunselman then implicitly introduced the issue of a possible conflict of interest on the part of Chuck Warpehoski (Ward 5), whose wife Nancy Shore is director of the Ann Arbor Transportation Authority’s getDowntown program.

Because the DDA funds the getDowntown program, the last thing Kunselman would want to have on his hands, he contended, was cutting that program – when a council colleague’s spouse could lose her job. And he knew that would happen if funding from the DDA to the getDowntown program were cut off – because he had spoken with Michael Ford, CEO of the Ann Arbor Transportation Authority, about that. According to Kunselman, Ford had assured him that if the DDA funding were to be cut, then Shore’s position would have to be cut as well. That had never been Kunselman’s intent, he said.

By way of background, The Chronicle had previously inquired about the getDowntown program budget and its funding sources. Based on information provided by AATA to The Chronicle, it appears that the federal funding component of the getDowntown budget exceeds the salary and benefits paid to Shore. [.pdf of 5-year getDowntown budget numbers] Based on Kunselman’s remarks, The Chronicle emailed Ford during the April 15 meeting and received a reply:

I recall the question being the funding for the program [federal] CMAQ funding which supports elements of the program and funding for employee positions – I don’t recall the specific question of just DDA funding impacting employee positions.

AATA director of communications Mary Stasiak had previously told The Chronicle in a phone interview that the existence of Shore’s position was not contingent on the existence of getDowntown’s go!pass program – which is where the bulk of the roughly $600,000 worth of funding from the DDA goes. And she’d explicitly said that Shore’s position was not contingent on the DDA’s funding of the getDowntown program.

From left: Councilmembers Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3).

Kunselman said he had also heard a lot of talk about a desire for collaboration. “I am willing to try to collaborate,” he stated. And that is why he wanted the postponement, he said. He wanted a chance to reach out to the DDA’s treasurer and to the mayor to find out if there’s something that could be done to address the TIF capture methodology. On Jan. 27, 2012 – over a year ago – Kunselman continued, mayor John Hieftje had received from the executive director the Ann Arbor District Library, Josie Parker, a letter that as far as Kunselman knew had never received a written response from Hieftje.

Kunselman read aloud the closing paragraph from the letter: “Based on the city’s recognition that its own ordinance requires excess TIF to be distributed to the taxing authorities, the library fully expects that it will continue to receive TIF refunds in the future. From this point forward, however, the library would ask for consultation with the city so that a calculation method can be agreed upon before any refund checks are issued.”

The purpose of this exercise, Kunselman said, was to bring some responsibility back. So he would be asking for a postponement when the council reached that item on the agenda, he concluded.

Five and a half hours later the council reached the DDA ordinance on its agenda.

DDA Ordinance Revisions: Deliberations – Postponement

Kunselman led off discussion by re-iterating his desire to see the second and final vote on the question postponed. He asked that the postponement be until the council’s second meeting in June, which falls on June 17. Kunselman indicated that he had already spoken with DDA board treasurer Roger Hewitt about meeting and discussing with him some of the issues that had been raised by the DDA and the community. “I hope that you can indulge… the fact that we are looking for a postponement,” he said. Kunselman’s motion to postpone was seconded by Sally Petersen (Ward 2).

Margie Teall (Ward 4) indicated that she would not be supporting a postponement that evening – because she did not support the ordinance revision as it was brought forward. She appreciated that Kunselman would like time to work on the question, and to start in a more collaborative manner. But she felt that the current draft before the council needed to be voted down. She pointed out that around 50 people had appeared before the council that evening to speak.

Teall allowed that there was concern and confusion about the nature of the TIF calculation, which she allowed probably does need to be examined, to clarify it. She felt that it would best be addressed, however, by the city administrator, the chief financial officer, and the DDA staff working together to bring recommendations forward to the council. She had an alternative resolution prepared, which she indicated she was prepared to pass around. But she would not support a postponement because she wanted the question to be voted on that night.

Sally Petersen (Ward 2) indicated she would support the postponement. She liked the spirit of collaboration that Kunselman was bringing forward in connection with the postponement. The council had heard a lot about the value that the DDA offers to the downtown area, she said, and about the DDA’s contribution to the support of affordable housing. She did not feel that any of that was in question in connection with the changes to the ordinance.

In the short term, Petersen allowed that there was “a little bit of a hit” to the DDA. But in the long term, she said, there would be an uptick in the DDA’s fund balance as a result of the ordinance amendments. She noted that there have been a lot of spreadsheets floating around in the last several weeks, and lots of versions of the DDA’s 10-year planning document that she has seen. The postponement would give everyone a chance to really take a look at the numbers, and what it means to the bottom line for the DDA. She was not convinced that there was a uniform understanding across the council of the impact of the ordinance changes on the DDA’s budget planning. That really needs to be clearly understood, she stressed. So for that reason she supported the postponement.

Jane Lumm (Ward 2) indicated that she would support the postponement as well. She thanked the city’s chief financial officer Tom Crawford, who had provided some very helpful spreadsheets, she said. She described one of the pages that had been provided as particularly helpful – which lays out the impacts on the DDA’s revenues over the next 10 years. She felt there had been a lot of confusion about the actual financial impact of the ordinance changes on the DDA. The community, she felt, needed some time to absorb the same information the city council had been provided. She felt the added time would be helpful in that regard.

Mayor John Hieftje indicated he would not support the postponement. “I think this was bad legislation from the day it was proposed,” he stated. He reiterated his view that he thinks that the ordinance amendments represent a threat to the city’s general fund. He claimed that he could show that over and over again. The work that the DDA does is very vital, he said. He added that “we have caught the DDA with this at exactly the wrong time,” and contended that the DDA had anticipated an increase in TIF revenue.

The DDA had spent down its fund balances for the largest projects if it had ever undertaken, Hieftje continued, and he did not know why the council would continue down the road with something that could be harmful to the city’s general fund and to the city’s ability to put police officers on the street. He also contended that light posts on Main Street were falling over when the wind blows, and that the project to replace those light posts might be delayed if these ordinance amendments were undertaken. “It’s almost as if we’re trying to punish the DDA for excellence …, ” he contended.

Margie Teall (Ward 4). In the background is Marcia Higgins (Ward 4).

Teall expressed her view that she did not think that clarity of the ordinance language could be achieved within the timeframe of the postponement. CFO Crawford took the podium to respond to Teall’s questions. When the council’s audit committee had met, Teall said, committee members had discussed the TIF calculations. As Crawford stood at the podium, she told him that at the audit committee meeting he had expressed the view that there needed to be an overhaul, or a look at the TIF calculations.

Teall asked Crawford if there was any confusion about how the TIF is to be calculated. Crawford allowed that he did not actually remember the specific conversation to which Teall had alluded – because there had been so many conversations on the topic. He did feel that the existing ordinance language is not clear. He expressed the view that the DDA has the ability and the right to interpret the ordinance language. The fact that there are so many questions about it is something that staff and the DDA are trying to work through, he said. “I’m not sure what I can say to help.” Crawford alluded to the last spreadsheet that Lumm had mentioned, saying he felt it addressed some of the areas that had previously been confusing.

Crawford noted that there is an interest in trying to understand the impact to the DDA. But he stressed that it’s important to understand the basis from which that impact is measured. Is the impact measured against the DDA’s assumed 10-year planning document, or is it measured against the new projections that the city has now? Crawford indicated that he’d attempted to flesh all that out in the last spreadsheet, which was as close as it comes to achieving clarity, he said, based on the questions that staff had been hearing.

Teall asked Crawford if he thought it would help if there were more clarity in the language. Crawford hoped that regardless of what the council’s decision is, at some point some clarity in the language can be achieved. Teall indicated that she didn’t think if the question came back to the council in June that clarity would exist.

Chuck Warpehoski (Ward 5) asked Kunselman directly if Kunselman’s intention was to bring the ordinance back in substantially the same form, or if he imagined through the collaborative process that there would be significant revisions to the proposed ordinance. Kunselman indicated that he was open to significant revisions – whatever it took to make sure that clarity is achieved. Kunselman felt that everyone was trying to reach clarity, which he said had been his original intent from “the get-go.”

Kunselman found it interesting that there is now interest in clarity from those who had opposed the effort initially, and who had called it bad legislation. He’d been working with the city staff to provide clarity to the language on the TIF calculation. “Are there other ways of doing it? I’m sure there are. Am I open to them? I very much am so.”

If the collaborative effort – among Hieftje and the DDA board treasurer and the city staff – results in significant revisions to the ordinance language, then those would come back at the second meeting in June, Kunselman said. But if that can’t be achieved by the second meeting in June, then the intent would be to postpone again, he said. He wanted to get the clarity that’s necessary so that everyone can understand the TIF calculations. And he allowed that could result in a need to restart the ordinance amendment process by introducing the revisions at first reading.

If the result was a first reading at the second meeting in June, Warpehoski wondered what the advantage would be of doing that. Warpehoski’s implication seemed to be that the council could vote down the ordinance revisions that night and start from scratch with a new first reading at the second meeting in June – if sufficient clarity had been achieved at that point.

Kunselman responded by saying that it was possible that the proposed amendments as they currently stood already did a pretty good job of achieving the kind of clarity that was sought. Kunselman pointed out that of all the speakers during the public hearing, no one had actually talked about the language of the TIF calculation and the council’s effort to keep the DDA’s budget whole. “It’s like nobody actually read the draft language” that was given initial approval by the council, Kunselman said. For all we know, Kunselman ventured, that could be the clearest language available.

Sabra Briere (Ward 1) asked Kunselman if he would consider a tabling instead of a postponement until a date certain. “It’s not that I don’t want this brought back up off the table,” she contended. She noted that she and Kunselman had talked about the need to achieve some clarity on the financial issues. She was not certain that clarity had yet been achieved. She had talked with city staff about some ideas to make her more secure in the clarity of the language. She did not feel she could even discuss it effectively that night.

From left: Sumi Kailasapathy (Ward 1), Sabra Briere (Ward 1) and Sally Petersen (Ward 2). Kailasapathy had to leave the meeting before it concluded.

Briere ventured that it might not be useful to tie things to a tight timeline – saying that it might require six months. She told Kunselman she did not think that he would necessarily need six months, but that’s the maximum time for which an issue can be tabled, she pointed out. She wanted to see that the collaborative effort was not tied to a rigid timeline – especially during the month of May [when the council is focused on approving the budget for the next fiscal year]. She did not figure that people would have a lot of flexibility during the month of May. Kunselman told her that he was not interested in tabling for six months.

At that point Kunselman laid out the parliamentary options, in an effort to encourage his colleagues to postpone the question, as he had asked. He pointed out that he could simply vote with the affirmative side and bring the question back for reconsideration at the next meeting. He noted that the council was, at that point in the evening, missing a couple of councilmembers who would be likely to be supportive of the postponement. Kunselman characterized the choices as “playing games” or just postponing. He confirmed with city clerk Jackie Beaudry that Kunselman was last in the roll-call sequence that night. [The roll call starts with a different councilmember each meeting, rotating around the table.] “All’s I’m asking for is a postponement until the second meeting in June,” Kunselman concluded.

Mike Anglin (Ward 5) indicated that in the brief conversations he’d had with members of the DDA board, they were willing to engage in further discussion. And that was exactly what Kunselman had been intending, Anglin said. He pointed out that the initial vote of the council on the question had been 7-3 in favor of having the matter go forward for discussion. He felt that postponing is exactly what the council should be doing. It was never a proposal that was meant to hurt the DDA, he said. Everyone at the table at the previous meeting had praised the work of the DDA, but they wanted further clarifications.

Christopher Taylor (Ward 3) noted that he hadn’t attended the previous council meeting. So he contented he was not fully apprised of what was said, or how it was said. But he ventured that, “If an earnest and polite conversation was intended, then that is what would have been requested.” He was happy that the council was moving in that direction. He allowed that Kunselman had raised a proper procedural point about voting last and being able to vote in the affirmative, putting Kunselman in a position to bring back the vote for reconsideration at the next meeting.

Still, Taylor felt that tabling was a more proper thing to do in this context. He agreed with Briere that the effort would require a conversation that would extend beyond the council’s second meeting in June. He felt the conversation should move the end result far away from the one that’s in the current resolution.

Taylor allowed that the resolution in front of the council would not be the “death knell of the DDA.” But he claimed it would “do harm and violence to the long-term plans of what I think has been demonstrated here to be a organization that is not broken and not in need of fixing.” He called the DDA an excellent steward of the downtown and the city’s collective resources. “They’re a credit to us all, and they do great work,” he said. On the postponement, he felt that a tabling would be best.

Warpehoski noted that Kunselman had expressed a desire not to play games. He hoped that what comes back in June would be significantly different from what is currently proposed and a fresh start can be achieved. He did not feel that arguing about tabling versus postponement was a good thing to be doing at 2 a.m. So Warpehoski supported a postponement to a date certain, to just keep it moving. He hoped that a different proposal would come back with language that did a better job with the governance and financing aspects. And if it did not, Warpehoski indicated he would be ready with amendments to try to put forward his vision.

DDA Ordinance Revisions: Postponement – Politics

Hieftje weighed in again: “Frankly, and since we’re being frank, I think that this started out with a very large political component.” So Hieftje wanted to postpone the question out beyond the council primary election date. [This year, the primary will be held on Aug. 6.] That would remove some of the political component, Hieftje contended. That way, good policy to be made without individual councilmember’s political goals being included, he said.

Hieftje felt that a postponement leaves an organization hanging that has been a very strong partner to the city. The last 10 or 12 years had been the worst in history since the last Great Depression, Hieftje said. Many cities across the state and across the nation had raised taxes to cope with it, he said, but the city of Ann Arbor has a millage rate that today is slightly less than it was back in the year 2000. When the city went to the DDA and wanted to renegotiate the parking agreement, the DDA did not have to do that, Hieftje said.

The DDA is a freestanding organization, he said, quickly adding that he had always maintained that the DDA is an “arm of the city.”

The DDA had “stepped up to the table” and renegotiated the contract under which the DDA manages the public parking system, Hieftje said. Now there is over $3 million a year that comes back to the city under terms of the parking contract, he noted. When the city was told by the Washtenaw County government that the city needed to move the 15th District Court out of the county courthouse, the DDA was there, and had granted the city $508,000 a year.

Hieftje did not want to keep the DDA “on the hook and hanging.” He thinks the process should have started out with a conversation with the DDA. “How come we didn’t want to do that to begin with?” Hieftje characterized the proposed ordinance revision as a “command-and-control” approach that he wanted to get off the table. Hieftje said he wanted to go back and have a sober conversation with the DDA.

Jane Lumm (Ward 2) then responded to Hieftje’s remarks:

I wasn’t going to go here but you sort of forced this issue, Mr. Mayor. Councilmember Kunselman has raised these issues for as long as I’ve been around. And you all know that. To suggest that they are simply politically motivated as you did at the last meeting, Mr. Mayor, does no credit to you or your role. You tried that with me once as well, and I think you would be better served to simply argue the merits of your position rather than attempt to personally discredit those who may occasionally disagree with you. I think it’s unfortunate that the rhetoric has risen to such an uncivil level, with personal insults and accusations. And frankly it appears that if any councilmember who has a view that may be different from the status quo, then it is either ‘politically motivated’ or ‘ill-informed.’ Perhaps there may be a different view, a different sense of priorities. I wish we could recognize and honor that reality in a much more civil manner on the council and as a community.

Lumm also pointed out that there were two councilmembers absent because they had to go to work in a few hours – so it was understandable why they needed to leave the meeting earlier. Lumm thought the council owed it to Marcia Higgins (Ward 4) and Sumi Kailasapathy (Ward 1) to give them an opportunity to vote on this.

On the question of postponement versus tabling, Lumm didn’t support tabling. “That’s basically shelving it,” she said. She pointed to the stack of written materials in front of her, saying that half of the notebooks were Q&As the council has received back from the staff. “We have flogged this thing,” Lumm said. And there has been a lot of interaction with the DDA. Lumm said, “We all know that this is not the catastrophic neutering of the DDA that is being portrayed.”

Lumm called herself a staunch supporter of the DDA – but she stressed that what she supported was an independent DDA. The ordinance change would help clarify the question about the TIF refund, Lumm said. It clearly needs to be clarified. So she didn’t understand the logic behind tabling it. Lumm appreciated that the postponement had been proposed for the second meeting in June and she thought that was fair, and so she would be supporting it.

Kunselman noted that the council had received the city administrator’s budget presentation that evening. So the council would be adopting the city budget with the DDA’s budget as a component unit of that budget – without changing it. No one is talking about changing the DDA budget for fiscal year 2014, Kunselman said. The reason he wanted to try to pursue action by the second meeting in June is that it’s the end of the fiscal year and the tax bills start going out. It’s his hope that as the tax bills go out, there would be new language about the TIF capture methodology. But he stressed that the city council would not be amending the DDA budget, regardless of what the ordinance revisions might be. The intent has never been to cut the DDA’s budget or to put the DDA in a position where the DDA has to cut programs. Kunselman pointed out that what’s at stake are new additional tax dollars.

Kunselman agreed with Lumm that the “scare talk” that Hieftje had used was not well-founded. Kunselman was willing to put some of the other things aside – an apparent allusion to the governance issues in the ordinance – in order to focus on the TIF capture methodology.

Kunselman addressed Hieftje directly, telling him that the Ann Arbor District Library had sent a letter to Hieftje, but Kunselman had not heard that Hieftje ever responded to it. Kunselman said he’d been criticized because he was standing up and trying to help out the library – which has a budget of roughly $12 million compared to the DDA’s budget of over $20 million. Who cares about the library? he asked, adding that he did. The library is an institution of our community, he said, but he thought the library’s thoughts on the issue are being squashed.

The idea that the city and the DDA don’t care what the library thinks and that the TIF capture will be calculated in accordance with whatever is best in the judgment of the DDA and the mayor shows arrogance, Kunselman said.

Kunselman observed the late hour and pled for a postponement. “It’s not about playing politics,” he stated, but “we can make it that way, if you want to keep talking about it that way.” Kunselman noted that he’d explicitly asked for collaboration. Kunselman contended that the interest in collaboration now on the part of opponents of the ordinance revisions would not have been shown, if the council hadn’t actually voted for the ordinance changes at first reading. The reason it had reached this point, Kunselman said, is that Hieftje had not addressed the issue for over a year: “And now you’re complaining about the fact we got a first reading?”

Kunselman returned to the parliamentary point about being in a position to assess the vote tally and vote with the prevailing side, giving him the opportunity to bring back the question for reconsideration at the next council meeting: “I’m the last vote. If you want to play the game, we can do that. … Or we can be kind and considerate at two o’clock in the morning and just please vote unanimously, and we’ll postpone it until the second meeting in June.”

Kunselman continued by saying that he would not push for a vote up or down at the second meeting in June, if there was not sufficient clarity in the language. “And you have my word that if we don’t have the language, … [I won’t] force a vote up or down in order to score political points. That’s not my intent. That’s exactly why I didn’t want to force the vote tonight.” He didn’t want to force the vote before the filing deadline for council candidates, he said, because the potential existed to create candidates based on that vote. [The filing deadline for the primary election is May 14.]

Kunselman said he did not want political intimidation – because that doesn’t yield good public policy. This is about public policy, not about scoring points, he said. “If you want to make it that way, then that seems how you want it to be. I’m sitting here taking the heat, taking the character assassination … I’m not going to back down just because you don’t want to be nice.”

DDA Ordinance Revisions: Postponement – Calling the Question

Warpehoski appeared to attempt to strike balance by noting that there are both public policy and political issues at play. “Let’s be honest about that,” he said, “It’s being played on all sides.”

Chuck Warpehoski (Ward 5).

Warpehoski believed that Kunselman had serious policy issues that he was pursuing honestly. But Kunselman had also had been quoted in the media as saying that it was 100% political and that councilmembers were all politicians and that people who supported his opponents need to understand that there are consequences for their actions.

But Warpehoski also noted that it was 2 a.m. He then “called the question” – a parliamentary move that is intended to end debate. Warpehoski pointed out that it was not a debatable motion and required a super-majority to pass. As some councilmembers sought clarification about the effect of Warpehoski’s motion, he said: “I’m saying let’s shut up and vote on … postponement.”

Outcome: The vote on calling the question was deemed to have failed, with Hieftje and Taylor voting against it. Higgins and Kailasapathy were absent.

The motion was deemed to have failed because it did not have eight votes, which is the number typically associated with a “super-majority” of the council. However, the council rules make a motion to call the question contingent on a 3/4 majority of those present, not of those members serving:

A motion to call the previous question (call for cloture) immediately ends all discussion and shall be out of order until all members have had an opportunity to speak twice to the question on the floor, and shall require a concurring vote of 3/4 of the members present.

On a vote of 7-2, Warpehoski’s motion to call to the question should have succeeded, and the council should have voted on the postponement at that point.

DDA Ordinance Revisions: Postponement – More Deliberations

Discussion continued on the postponement of the question until June 17. Hieftje asked if the council would consider postponement until Sept. 30. Between tabling and a postponement until Sept. 30, Hieftje indicated he supported postponement until Sept. 30. He noted that the conversations between the city and the DDA about the new parking contract had taken a year.

Speaking to Kunselman, Hieftje began: “If you really want to have a conversation, if it’s genuine this time, if you want to actually collaborate with the DDA… ” then Hieftje felt that Sept. 30 was a date that would be appropriate. Kunselman responding by reiterating his desire to have clarity before the tax bills go out. The money will get dispersed, he said, and if the DDA receives it, then the city may never get it back. So the purpose is to try to get it done.

“We’re talking some very simple language from everything I understand,” Kunselman said. Given the two months he was asking for, Kunselman ventured that it would be possible to work something out. “You have my word: If we don’t have it worked out by the end of June, I will not request or force a vote on a second reading.”

Briere admitted that Kunselman’s idea about what happens at the beginning of the fiscal year and disbursement of taxes left her confused. She asked for some explanation of what exactly happens with the summer taxes. Crawford indicated that taxes are levied and collected – which means the treasurer collects all the money and settles with the county to make sure that everything is correct, and then the funds are distributed to the various entities. He confirmed for Briere that it’s the FY 2014 taxes that are being collected. The fiscal year begins July 1.

Some back-and-forth between Crawford and Briere established that the city’s role in dispersing TIF money to the DDA would stay the same, regardless of any ordinance change. An ordinance change could affect how the DDA calculates a possible refund, however. Crawford told Briere he would have to double-check to see if an August change in the ordinance could affect July distributions. He thought that as long as you stay within the fiscal year, a change can be made.

Outcome: The final tally on the postponement was 4-5 in favor. Voting no were Teall, Hieftje, Briere, and Taylor. Voting yes were Warpehoski, Anglin, Petersen and Lumm. Voting last was Kunselman, who counted the tally at 4-4 and voted no so that he would be on the prevailing side. This put him in a position to bring back the vote for reconsideration at the council’s next meeting, on May 6.

DDA Ordinance Revisions: Tabling

With the motion to postpone having failed, Briere moved to table the item. And she asked the city administrator, the mayor, Kunselman, the city’s CFO, and the DDA representatives to begin meeting. It’s a double motion, she allowed, but she was doing it because it was in the interest of time.

Hieftje invited further discussion on the tabling. There was none. [Under Robert’s rules, a motion to table is in any case not supposed to be subject to debate.]

Outcome: The motion to table failed on a 5-4 vote – because it did not have a six-vote majority. Voting for tabling were Teall, Warpehoski, Hieftje, Briere and Taylor. Voting against tabling were: Anglin, Petersen, Lumm and Kunselman.

At that point Lumm got clarification that the council would in fact be voting on the issue that night.

DDA Ordinance Revisions: Amendment – Delayed Enactment

Petersen then proposed a possible amendment to the ordinance. She proposed that the clarification of the calculations would be enacted starting in fiscal year 2015 instead of fiscal year 2014, as originally called for. The benefit, she said, is that it would be consistent with the other timing issues that are mentioned in connection with implementing the DDA board governance changes. From a financial perspective, it would also eliminate the impact of the ordinance clarification’s $363,000 shortfall to the DDA in FY 2014. After that, Petersen, said, the shortfalls were, in her mind, minimal and actually became windfalls.

Teall responded to Petersen’s proposed amendment by questioning why the postponement Petersen had voted for could not have been proposed for longer – past the second meeting in June. She wondered why the ordinance revision couldn’t be postponed until next fall. Petersen replied that the postponement had been voted down. Petersen also indicated that she would rather have postponed the issue – but given that a vote appeared imminent, she wanted to set about to amend the ordinance.

Petersen indicated that she would rather have used the postponement to allow Kunselman and the DDA to come up with something that was mutually agreeable. But because the postponement did not get approved, she was simply looking for a different option that might be agreeable to the DDA and might make everyone feel a little bit better that the DDA would not be taking a “hit” in fiscal year 2014. Petersen had been hoping that this was something that Kunselman could have led the DDA to agree to, but in the absence of that possibility, she was proposing it herself.

Hieftje asked for deputy director of the DDA Joe Morehouse to come forward and walk the council through a version of the DDA’s 10-year planning document. Hieftje got confirmation that in FY 2015 and FY 2016, the DDA’s TIF fund balance was planned to be $441,060 and $264,816. Hieftje questioned whether it would even be possible for the DDA to undertake TIF projects with fund balances that low. Susan Pollay, executive director of the DDA, indicated that the concern would be about leaving the DDA with a zero fund balance. Pollay indicated that in a previous year, the auditor had highlighted a deficit in the DDA’s parking fund. Hieftje pointed to streetlight replacements on Main Street and curb ramp replacements as projects that might not happen if the ordinance amendments were to be enacted.

At that point, Kunselman had gotten out of his seat and moved down the table to talk with Petersen. Hieftje objected, saying, “We don’t usually have side conversations during the debate.” Hieftje continued by saying that it was hard for him to understand how people could say that this was not going to harm the DDA or its ability to do projects.

Lumm countered by asking Crawford to confirm what the impacts are of the ordinance changes on the DDA. She felt that the rhetoric had escalated and that the council was now hearing how catastrophic an impact this is going to have on the DDA. Lumm began her recitation of the financial information. For FY 2013, Lumm noted, there is no TIF refund planned. For FY 2014 as a result of new developments, the gross TIF is projected to grow by $650,000 or 17%, to $4.5 million and then to grow by roughly $100,000 a year. “So far so good?” she asked Crawford. Yes, he replied.

But under the ordinance amendments, Lumm continued, in FY 2014 there would be a $930,000 refund to the various taxing entities, of which the city would receive $490,000. The DDA would retain $3.57 million, which represents a $280,000 reduction compared to the current year, she said. So what folks are characterizing as “the sky is falling” and dismantling the DDA is all about a $280,000 year-to-year reduction to the DDA’s revenues compared to this year, which is equivalent to a 1% reduction for a $25 million annual operation, she concluded. The city of Ann Arbor would receive $490,000 more, she continued. Under the ordinance revisions, she said, TIF revenue to the DDA is projected to reach $4.6 million by 2023. That’s 19% higher than the FY 2013 level, Lumm said.

Crawford had two comments on Lumm’s remarks. After FY 2014, he said, the city had used the standard DDA assumption for growth. [That means that those numbers don’t assume completion of major new construction like 624 Church St., which has been approved by the council, or 413 E. Huron, which might be approved.]

The numbers that have been discussed also don’t include the reduction due to the elimination of the personal property tax, Crawford noted. That amounts to about $175,000 a year, he said. Lumm countered by saying that the personal property tax would be eliminated regardless of the ordinance change.

Outcome: Petersen then asked if her amendment might be accepted as “friendly,” which meant that no vote would be needed. Petersen’s amendment was accepted as friendly.

DDA Ordinance Revisions: Disclosure

Warpehoski at that point said he wanted to take the opportunity again to disclose that his wife, Nancy Shore, is the director of the getDowntown program, which is funded in part by DDA parking revenue funds. His understanding of Shore’s funding was that it was not the case that her job would be in jeopardy. He said if anybody had questions about the ethics of his voting on the item, they could excuse him from voting. He wanted to make sure that that was on the table.

Warpehoski read aloud the bulk of the relevant city charter passage.

The charter has two parts that address voting duty and recusal of councilmembers:

Except as otherwise provided in this charter, each member of the Council present shall cast a “yes” or “no” vote on each question before the Council, unless excused therefrom by a vote of at least six members.

A member of the Council shall not vote on a question in which the member has a financial interest, other than the general public interest, or on any question involving the member’s own conduct. If a question is raised under this section at any Council meeting concerning the eligibility of a member of the Council to vote on any matter, such question shall be finally determined by the concurring vote of at least six members of the Council, not including such member

No one responded to Warpehoski’s disclosure and no vote was taken to determine the issue.

DDA Ordinance Revisions: Governance

Lumm continued by characterizing the impacts of the ordinance amendments on the DDA as “not that significant,” once you get past the hyperbole about dismantling the DDA. The goal is to define the funding formula for the DDA, which would result in improved fiscal discipline, accountability, and controls, she said. She did not think that could be inappropriate.

Lumm began to turn the conversation toward the governance aspects of the DDA ordinance amendments. She supported a strong and autonomous DDA, and contended that today Ann Arbor does not have an arm’s-length, independent DDA. Instead, Lumm continued, the DDA is currently an extension of the mayor and the city council. She felt the best interests of the DDA, the downtown, and the city would be better served by more independence and fresh eyes, so for those reasons she supported the governance aspects of the proposal.

Those governance issues include term limits and some guidelines with respect to appointing elected officials to the DDA board. The result was that significant funding decisions are made outside the regular budgeting process, Lumm said. With little or no accountability, the DDA awards around $2 million in grants annually. She wasn’t saying those grants have been inappropriate, but the decision about whether to use a half-million dollars a year to pay for debt on the new city hall/Justice Center (as the DDA does) or to fund public safety personnel should be a decision made inside the budget process, not outside, she said.

So Lumm supported the elements of the ordinance revisions that more clearly defined TIF capture and how much the DDA retains and how much is refunded to the original taxing entities. She did not feel it represented a hardship to the DDA. Clarifying the funding represents a positive step forward in terms of transparency, accountability, and control and ultimately results in an equitable sharing of revenues, she said. By passing the ordinance revisions, she felt that the council would be taking a step toward re-establishing a high-performing, autonomous DDA, coupled with the appropriate levels of controls and accountability. She concluded that she would be supporting the amendments.

DDA Ordinance Revisions: Amendment – Capital Budget

Briere said she wished she felt as confident as Lumm did that the proposed language change provides the clarity that she seeks. So she offered an amendment that would add language:

The authority shall submit their capital budgets to incorporate them into the City’s Capital Improvement Plan (CIP). The authority shall at the time they submit their budget for Council approval identify that portion of the budget which is operating and that which is capital projects.

The purpose of the change, Briere said, was to reflect a concern she had heard over the years. The concern was that the city had repeatedly asked the DDA to undertake projects on behalf of the city, and that the DDA had always said yes. The DDA has allocated its funds to undertake those projects, but they are never in the city’s capital improvements plan, because the DDA is an independent organization, she said.

While the city council approves the DDA’s budget, the city council does not approve the DDA’s allocations. So by having the DDA provide the city with a list of proposed capital improvements at the same time that the city council looks at the capital improvement plan, and by breaking the budget into capital improvements versus operating funds, that would allow the council to ask questions about the DDA’s intended capital improvements. If some people felt that the DDA had spent its money carelessly without council approval, her goal was to begin to address that, Briere said.

Hieftje wondered what added clarity Briere’s amendment achieved. Briere noted that when a project springs forth as full-blown, people might have the impression that they’ve never heard of it before. This is an attempt to guard against that, she said.

Outcome: Briere’s proposed amendment passed on a unanimous vote.

DDA Ordinance Revisions: Amendment – Term Limits

Hieftje then indicated that he had a particular point he wanted to make – but someone else would need to move the amendment, which related to the term limits set forth in the ordinance changes. He noted that the DDA works on long-term projects, saying that the South Fifth Avenue underground parking structure was in the making for about 10 years. He attributed the idea to former DDA board member Rob Aldrich.

Currently on the DDA board there are five members who are in their second term, Hieftje said. Three members are in their first term. One member is in his third term. And one member [Leah Gunn] has served many terms. Hieftje indicated she would be retiring from the board this year. He did not see a need for term limits on the DDA, saying that they had not turned out well for the state of Michigan in the legislature – something he felt was acknowledged by most people. He thought there could be at least two members who did not wish to be reappointed this year, which meant there would be two vacancies coming up. So he asked if there was someone who would be willing to offer an amendment to strike the term limits from the ordinance change. The proposal was moved by Teall and seconded by Warpehoski.

Lumm indicated that she would not support the elimination of term limits. She felt that most organizations have bylaws that cover term limits. She called term limits “a positive” and felt they were appropriate. She described the DDA board as composed of many current and former elected officials. Some have joked that the DDA board has become like a kind of “retirement home for former councilmembers,” Lumm said. It needs greater independence, she contended.

Under mayor Ingrid Sheldon, Lumm said, term limits for all boards were the norm. The expectation at the time – of both Democrats and Republicans who served with Sheldon – was that there would be term limits, and there was a lot of turnover. She felt there was little turnover on many of the city’s boards and commissions. She felt the term limits would help strengthen the DDA as an organization. She wanted the board composition to be more reflective of the downtown community. She did not want it to be an extension of the city council – which is what she felt like it was today.

Lumm questioned why the DDA had pledged $508,000 a year to pay for the new police/courts building. If she owned a downtown business, she would ask the question: How does that help my downtown business? Actions like that are taken by the DDA because the makeup of the board makes it an extension of “this group sitting here,” and that’s not healthy, Lumm contended.

Responding to Lumm’s question about the DDA’s support of the police/courts building, Hieftje noted that public buildings are one of the things that the DDA is enabled by state statute to spend money on. Hieftje also cited David DeVarti and Leah Gunn – long-time former and current members of the DDA board – as a counterexample to Lumm’s contention that there had been defacto term limits imposed under Sheldon.

Taylor noted that a broad base of business leaders in the downtown and in Ann Arbor had voiced their wholehearted support for the DDA, emphasizing the “it-ain’t-broke aspect of the organization.” So he supported the amendment to strip out the term limits.

Stephen Kunselman (Ward 3).

Kunselman told Hieftje that he was willing to support stripping out the term limits “if you’re going to tell us right now before we go too much further that you’re willing to support this ordinance amendment, if it contains the TIF capture methodology that has recently been amended [in a friendly way]…” Kunselman continued: “It’s three o’clock in the morning. If you give us your word that you’re going to vote on amending the ordinance with regards to the TIF capture, then we can get through this. Otherwise we’re going to go through all this …”

At that point, Hieftje interrupted Kunselman by saying “Absolutely not!” Kunselman sighed: “Well, then, here we go.”

Warpehoski supported the stripping out of term limits. He felt that boards need both renewal and historical memory. He felt that a small staff of four people, which the DDA has, is not adequate to provide the kind of living memory that a long-term board member can provide.

Warpehoski stressed that if the council did not want to re-appoint someone, it was a matter of lining up the votes to accomplish that. Petersen indicated she did not support stripping the term limits out, because she felt it’s helpful to have some planned turnover. Anglin felt like term limits might help reinvigorate some boards. Some people are intimidated from applying to boards because they feel like they would not fit in, he said.

Outcome: The vote on stripping out term limits failed on a 5-4 vote, because it did not get the needed six-vote majority. Voting against term limits were: Teall, Warpehoski, Hieftje, Briere, and Taylor. Voting for term limits were Anglin, Petersen, Lumm, and Kunselman. Higgins and Kailasapathy were absent.

DDA Ordinance Revisions: Denouement

After the failed outcome of the attempt to amend the ordinance revision, Warpehoski noted the dynamic that had evolved from the absence of two councilmembers. He also pointed out the lateness of the hour. “We’re not getting anything done. We’re not thinking straight.” He moved to adjourn the meeting until Monday, April 22, at which time it would continue.

After a brief recess, the council came back and Warpehoski’s motion was to postpone all remaining agenda items until May 6, the next regular meeting, thus ending the April 15 meeting.

Outcome: The council voted unanimously to postpone all remaining items on its agenda until May 6. [.pdf of DDA ordinance as it will appear on the council's May 6, 2013 agenda]

April 15 Actions

The council did take action on a limited set of items at the April 15 meeting. Some of them were moved ahead on the agenda at the start of the meeting, because they were pressing matters or else needed eight votes to pass – like items involving land acquisition. The agenda changes reflected an implicit recognition that some councilmembers might need to leave before the meeting concluded.

Action: Wastewater Treatment Pumps

The council was asked to consider a $122,595 contract with Hubbell, Roth & Clark Inc. for replacement of “secondary effluent pumps” at the city’s wastewater treatment plan. One of the pumps had failed catastrophically. At the council meeting, wastewater treatment facility manager Earl Kenzie told the council that an assessment was made of the other five pumps to determine if the one pump should simply be replaced or if all of them should be replaced. That assessment, Kenzie said, showed that the other five pumps, which are over 30 years old, are in similar shape.

Outcome: The council unanimously approved the contract with Hubbell, Roth & Clark Inc. for the pump replacement.

Action: Bridge Maintenance Program

On the council’s agenda was an application for funding under the state and federal local bridge program, which the city hopes will fund up to 95% of eligible construction costs. The remaining 5% would need to be paid by the city of Ann Arbor. The city is also responsible for design, construction engineering and testing costs.

The three city bridges that would have preventative maintenance done with funding from the program would be: the Fuller Road bridge over the Norfolk Southern Railroad tracks; the Maiden Lane Bridge over the Huron River; and the East Medical Center Drive bridge over the Norfolk Southern Railroad.

Outcome: The council unanimously approved the funding application for the local bridge program.

Action: MDOT Application for 721 N. Main St.

The council was asked to approve an application to the Michigan Dept. of Transportation (MDOT) and the Southeast Michigan Council of Governments (SEMCOG) for funding through the transportation alternatives program (TAP) to support future city work on its property at 721 N. Main St.

During the brief discussion by the council, Sabra Briere (Ward 1) noted that the city had been awarded $150,000 by Washtenaw County parks & recreation for the 721 N. Main site, which is contingent on approval of a $300,000 grant that the city has requested from the Michigan Dept. of Natural Resources Trust Fund. Briere expressed her hope that the TAP money could be another grant that will bring amenities to the city property, including pathways and a wetland.

Outcome: The council unanimously approved the grant application to MDOT and SEMCOG for the 721 N. Main property.

Action: Land Purchase Near Ruthven Nature Area

The council considered a resolution to purchase another parcel within the city limits adjoining an existing nature area. The purchase price for the roughly 8-acre vacant parcel owned by Windy Crest Partnership – located just east of the Ruthven Nature Area – was $110,000. The parcel fronts on Meadowcreek Drive.

The parcel purchased by the city lies mostly within the floodplain or floodway as this image shows.

The city’s share of the purchase price is $82,500, with the remaining $27,500 contributed from Washtenaw County parks & recreation. Including the $13,000 in closing and due diligence costs, the city of Ann Arbor’s share amounted to $95,500, which will be paid from the city’s open space and parkland preservation millage proceeds.

The parcel is mostly in the floodway, as Millers Creek runs through it. Future costs associated with maintaining the site will include management by the city’s natural area preservation staff, who will conduct ecological burns and remove non-native species.

Purchase of the Meadowcreek Drive property marks the third similar acquisition by the city in about the last seven months, using funds from the open space and parkland preservation millage. At its Oct. 15, 2012 meeting, the council authorized the acquisition of a parcel on Hampstead Lane, adjoining the Kuebler Langford Nature Area. And at its March 4, 2013 meeting, the council authorized the acquisition of a roughly 0.357-acre piece of vacant land located on Orkney, adjoining the Bluffs Nature Area.

During the brief council deliberations, Jane Lumm (Ward 2) said she was pleased to see the item on the agenda. She ventured that sometimes people forget that the greenbelt and open space millage was conceived of having a two-thirds to one-third split between land purchased outside and inside the city. She noted that the parcel is in Ward 2, which she represents. She called the acquisition a high value investment of the millage proceeds.

Outcome: The council voted unanimously to purchase the parcel.

Action: Riverside Easement for DTE

The council considered an easement between the city of Ann Arbor and DTE Energy – for land in Riverside Park where utility poles are located.

The easement had been recommended for approval by the Ann Arbor park advisory commission at its March 19, 2013 meeting. [.pdf of easement agreement]

DTE Energy Buckler substation site plan. (Links to larger image)

The easement agreement is needed so that DTE can remove old utility poles and install new poles and overhead lines – generally in the same location as existing poles and lines at Riverside Park. The easement allows DTE to provide maintenance on those poles and lines. DTE requested the easement in relation to an $8 million new electrical substation that the energy firm is building on land adjacent to the park. The Buckler substation’s site plan was approved last year by the city’s planning commission on June 5, 2012. It did not require city council approval.

The overall project entails building the substation in the utility company’s Ann Arbor service center – to provide a way to distribute an increase in electrical power to the downtown area due to increased demand for electricity. The project includes two 15.5-foot tall electrical transformers and related electrical equipment on raised concrete pads, and a new power delivery center (PDC) – a 630-square-foot, 12.5-foot tall steel structure. The source of power will be transmitted through underground sub-transmission cables in an existing manhole and conduit system.

The project also needed a variance to the 15-foot conflicting land use buffer requirements along the east side property line, adjacent Riverside Park. DTE requested a variance that would allow the firm to plant 23 trees along the far western side of Riverside Park instead of on DTE property. PAC recommended approval of that variance at its Feb. 28, 2012 meeting. It was subsequently authorized by the zoning board of appeals on June 27, 2012.

In addition to planting trees in the buffer, DTE plans to remove 15 trees along Canal Street, which will be replaced by 50 trees in other parts of the park. As stipulated by city ordinance, DTE also will be required to pay the city a “tree canopy loss” fee. According to the city’s urban forestry website, the current canopy loss rate is $186/inch for shade trees and $172/inch for ornamental trees. For this project, DTE will pay $23,800, which will be earmarked for future improvements to Riverside Park.

Construction on the substation will take place during the summer of 2013.

Outcome: Without discussion, the council unanimously approved the easement.

Action/Postponement: Summit Townhomes

The site plan and necessary zoning for the Summit Townhomes project both appeared separately on the council’s agenda. But the council reached only the zoning question before voting to postpone everything.

Both the site plan and zoning request previously had been postponed by the council at its March 18, 2013 meeting. The property is located at 2081 E. Ellsworth Road.

The parcel for the Summit Townhomes development (shaded yellow). 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.

March 18 had been the first time the site plan had been before the council. But the R3 (townhouse district) 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, at its Feb. 4, 2013 meeting, the council heard from about a half dozen people who spoke during the public hearing, 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.

On the zoning question, council deliberations consisted of just some brief remarks by Christopher Taylor (Ward 3). He observed that the issue had been postponed on a number of occasions, and at this point he was willing to let it go forward. Residents in the area had spoken persuasively about a number of concerns involving density and traffic congestion. But Taylor felt that residents recognized that the differences between the various options were marginal – even though those differences had been large enough that the question had merited further inquiry.

Outcome: The council voted unanimously to approve the R3 (townhouse) zoning, but did not reach the site plan approval before voting to postpone everything on its agenda. So the site plan will return to the council’s May 6 agenda.

Postponement: Theta Delta Chi Site Plan

On the council’s agenda was a site plan for the expansion of the Theta Delta Chi house at 700 S. State. The property is located at the southwest corner of State and Monroe streets.

Aerial view of Theta Delta Chi property, at Monroe and State streets.

The city planning commission had recommended the project for approval at its Feb. 21, 2013 meeting. Commissioners also granted a special exception use for the building.

The proposal includes expanding the square footage from 12,386 square feet to 14,752 square feet by making an addition at the rear of the fraternity house. The property is zoned R2B (two-family dwelling district and student dwelling district), and the size of the lot would allow for occupancy of up to 50 people. However, the fraternity is not proposing to increase its current occupancy of 33 residents.

The new addition will include an expanded restroom and shower facilities, common space, a resident manager’s apartment, and a bike room with nine bicycle spaces. According to a staff memo, the project entails moving the driveway, which is accessed off of Monroe Street, about five feet to the east. To do this, the fraternity will need to enter into an agreement with the Ann Arbor Downtown Development Authority and shift two on-street parking meters a few feet to the east.

The project also will require several variances from the city’s zoning board of appeals, including: (1) permission to alter a nonconforming structure (due to height and setbacks); (2) variances from Chapter 59 (off-street parking) to reduce the number of parking spaces required and allow one parking space in the front open space; (3) a variance from Chapter 47 (streets) to reduce the drive opening width; and (4) a variance from Chapter 62 (landscape and screening) to reduce the conflicting land use buffer width.

Other changes planned for this project include converting a yard on the south side of the house into a large patio. That area is currently used for parking. A new shed for a dumpster, recycling carts, and bike storage is proposed near the southwest corner of the site.

The fraternity is adjacent to apartment buildings and across the street from the University of Michigan law school.

Outcome: The council did not reach the Theta Delta Chi site plan on its agenda before deciding to postpone every item. It will appear on the council’s May 6 agenda.

Postponement: Privacy Law

The council was asked to consider a new ordinance regulating the use of public surveillance cameras. [.pdf of ordinance as presented to the council on April 15, 2013] This was to have been the first reading of the ordinance. All ordinances require readings at two separate meetings of the council before they can be enacted.

The proposed video privacy ordinance would not apply to CTN cameras like this one mounted in the Ann Arbor city council chambers.

The new ordinance would apply only to a limited range of cameras – those used by the city of Ann Arbor “to monitor human activity without the physical presence of an operator, including cameras on remotely operated aerial vehicles.” The ordinance would not apply to a range of city of Ann Arbor cameras, for example: cameras used to improve traffic design, security cameras operating in jails, prisons, water treatment facilities, public housing facilities, or the Ann Arbor Airport and other governmental facilities.

The new ordinance would allow for public surveillance cameras to be installed for 15 days or less at the discretion of the city administrator if the purpose is to address a specific criminal problem.

A period of longer than 15 days would require two-thirds of nearby residents to give written permission. Regardless of the period of the installation, on-site notice of the camera’s presence would be required. If a private residence is in the public surveillance camera’s range, then the residents of that property would have to give written permission for the installation.

A public surveillance camera could not be used for live-monitoring, except in emergencies, and audio recording would not be permitted. Access to the recorded images would be limited to “employees of the police department and attorneys involved in criminal proceedings.” After 90 days, surveillance recordings would be deleted unless they are part of an ongoing investigation. A report on the effectiveness of a camera would be published on a public website after its removal.

The council had been alerted to the forthcoming ordinance proposal nearly four months ago, when Chuck Warpehoski (Ward 5) told his colleagues at their Dec. 20, 2012 meeting that he and wardmate Mike Anglin would be bringing a proposal forward.

At that meeting, Warpehoski said the Ann Arbor police department doesn’t currently use that surveillance technique, but there had been some concerns in other communities.

By way of additional background, the ordinance has been long in the works but has been delayed. Former Ward 1 councilmember Sandi Smith had announced at a council meeting over a year ago, on Aug. 4, 2011, that she’d be bringing a video surveillance ordinance for consideration at the council’s Sept. 6, 2011 meeting. And a year before that she’d indicated the human rights commission would be working on the issue.

Outcome: The video privacy ordinance was not reached on the agenda before the council decided to postpone everything remaining on the agenda. The video privacy ordinance will be added to the council’s May 6 agenda.

Postponement: 413 E. Huron

One of the major agenda items of the April 15 meeting was the site plan application for 413 E. Huron – a proposed 14-story, 216-apartment building at the northeast corner of Huron and Division streets.

From the site plan application for 413 E. Huron. Critical root zones of landmark trees are shown by the dashed circles. The root zones were a focus of much of the questioning by councilmembers on March 18, and was a focus of public commentary on April 15.

The project was presented to the council as a “by right” project, which means that in the judgment of the city planning staff, it met all the zoning requirements.

The Chronicle counted 51 speakers during the public hearing on the 413 E. Huron site plan.

The council had previously postponed a site plan decision on April 1, 2013 and on March 18, 2013.

Consideration of the site plan came after the council had considered and postponed, then finally voted not to impose a possible moratorium on site plan applications in the D1 (core downtown) area.

Instead, the council voted on March 18 to give the planning commission direction to review the city’s D1 zoning. The scope of that review and a deadline of Oct. 1 was given at the council’s April 1 meeting.

A new public hearing on the project was started at the April 1 meeting, and held open so that it could resume on April 15. That public hearing will continue on May 6.

Images for the proposed 413 E. Huron project, at the northeast corner of Huron and Division. On the left is an early rendering provided by the developer. On the right is an updated version presented to the city council on March 18, 2013.

During council communications time, mayor John Hieftje took the opportunity to repeat a point that has been made during public commentary at previous meetings. The point was that the 2009 A2D2 rezoning, which designated as D1 (downtown core) the parcels where the 413 E. Huron is intended to be built, imposed a height limit of 150 feet, where no height limit had previously existed.

Hieftje continued by noting that the density allowed under the D1 zoning was only slightly higher than the previously-allowed density.

Sabra Briere (Ward 1) thanked Hieftje for making the point. She also pointed out that the previous zoning would have allowed only for a single use. It could not have been built as a multi-use like the proposed 413 E. Huron project and still met the code. Whether anybody would have built a commercial building that tall is something that “we’ll hopefully never know,” she said.

Outcome: The council did not reach the 413 E. Huron site plan on its agenda before deciding to postpone everything remaining. The site plan will appear on the council’s May 6 agenda.

Postponement: Misc.

A number of other agenda items were subject to the wholesale postponement of everything remaining on the council’s April 15 agenda. Those included the following:

• The appointment of Stephanie Buttrey as a member of the greenbelt advisory commission (GAC). Nominations to GAC are somewhat different from most other boards and commissions, in that nominations are made by the council as a body, not the mayor. Buttrey is being nominated to serve out the remainder of Liz Rother’s term – through June 30, 2014. Rother resigned the position. The resolution to appoint Buttrey was slated to be effective May 6 – which reflects the council’s typical practice of placing the resolution on the agenda as a “nomination” but then postponing the vote until the next meeting. In that respect the pattern is consistent with appointments for which the mayor places nominations before the council at one meeting, with a council vote taking place the following meeting.
• Confirmation of nominations to boards and commission made at the council’s April 1 meeting. Those included Sheila Steinman to the commission on disability issues and a reappointment of Ingrid Ault to the housing and human services advisory board. On April 1, Nickolas Buonodono had been nominated to replace Leigh Greden on the Ann Arbor Housing Commission (AAHC) board, after Greden had reached the end of a term. However, that nomination was not on the council’s April 15 meeting agenda for confirmation. According to AAHC executive director Jennifer Hall, who spoke to The Chronicle in a telephone interview, Greden may seek reappointment for a second term if he can accommodate his schedule to the meeting times.
• An amendment to an emergency purchase order for $7,500 with Waste Management Inc. for the Dexter Avenue improvements project. The council had previously authorized an emergency purchase order for $45,000 to remove contaminated soil discovered during excavation. It turned out there was more contaminated soil than initially thought.
• Establishment of a contingency budget of roughly $10 million for the facilities renovations project at the wastewater treatment plant. The council had previously awarded a roughly $10.8 million contract with Malcolm Pirnie Inc. (MPI) for engineering services. And the council had approved the tentative award of a roughly $93 million construction contract with Walsh Construction Company II LLC.
• Approval of $262,000 in payments to Ultimate Software Group over the next two fiscal years. The city uses the software for human resources and payroll services.

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

Next council meeting: Monday, May 6, 2013 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron. [Check Chronicle event listings to confirm date]

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The council was in the middle of deliberations on the DDA ordinance when Chuck Warpehoski (Ward 5) suggested that it would be appropriate to adjourn the meeting, given the late hour. The politics of the issue had become heated. And two councilmembers who had supported the ordinance revisions at first reading had needed to leave the meeting before it ended – Marcia Higgins (Ward 4) and Sumi Kailasapathy (Ward 1).

Early in the meeting, Stephen Kunselman (Ward 3) had indicated he’d be moving for postponement. But when the council came to the item on its agenda around 2 a.m., mayor John Hiefjte likely recognized the needed votes to pass the ordinance revisions were not at the table. So Hieftje made an effort to force a vote up or down.

Hieftje forged ahead despite Kunselman’s observation that Kunselman’s turn in the roll call vote was last that night, so he’d be able to assess the status of the vote tally, and vote with the prevailing side. Voting with the prevailing side would give him the opportunity to bring the matter for reconsideration at the next council meeting, with a full complement of councilmembers at the table.

A motion to postpone to a date certain was defeated, as was a motion to table. When the council set about amending the ordinance, an effort to strip out term limits failed. At that point Warpehoski suggested the adjournment. On the advice of the city attorney, a decision was made to postpone all remaining action items on the agenda.

The duration of the meeting was due in part to 45 speakers during the public hearing on the DDA ordinance, and 51 speakers on the 413 E. Huron site plan, which was also postponed.

Several revisions to Chapter 7, a city ordinance governing the Ann Arbor DDA, had received an initial approval by the city council at its April 1, 2013 meeting. The revisions would result in roughly something like $500,000 in additional annual revenue for the city of Ann Arbor – compared to what it would receive under the DDA’s current interpretation of the ordinance. However the exact amount provided by city staff has varied.

The revisions ultimately postoned by the council fell roughly into two categories: (1) those involving board composition and policies; and (2) calculation of tax increment finance (TIF) capture in the DDA district.

In the first category, the revisions to Chapter 7 that have received initial approval by the council included: a new prohibition against non-mayoral elected officials serving on the DDA board except by agreement with the other taxing jurisdictions; term limits on DDA board members; and a new requirement that the DDA submit its annual report to the city in early January.

More significantly, the changes include revisions to Chapter 7 that would clarify how the DDA’s TIF tax capture is calculated. While the interpretation of the language is disputed, it’s generally acknowledged that the ordinance language doesn’t provide explicit and clear guidance on the calculations.

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 ordinance revisions 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 the projections for the valuation of the increment in the TIF plan, which is a foundational document for the DDA. The result of the clarification to the Chapter 7 language would mean in the neighborhood of $300,000 less TIF revenue for the DDA in FY 2014 – compared to the $3.933 million shown in the DDA’s adopted budget for that year. For FY 2015, the gap between the DDA’s budget and the projected TIF revenue – using the proposed clarifying change to Chapter 7 – would be around $70,000 according to one projection.

However, the total increment in the district on which TIF is computed has shown significant growth. And under the proposed clarification of Chapter 7, that growth would result in a return of TIF money to other taxing jurisdictions (would otherwise be captured by the DDA) totaling $931,000 each year for FY 2014-15. The city of Ann Arbor’s share of that would be roughly $500,000, of which  about $300,000 would go into the general fund. The city’s general fund includes the transit millage, so about $60,000 of that would be passed through to the Ann Arbor Transportation Authority.

The amount of TIF capture that’s returned to the other taxing jurisdictions is tied to growth in the valuation by the Chapter 7 language. Under Chapter 7, 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. In 2011, the DDA for the first time returned excess TIF capture to other authorities, when the existence of the Chapter 7 language was reportedly first noticed. At that time, the DDA made repayments of TIF monies to other authorities of around $400,000, which covered what was owed going back to 2003. When the DDA calculated the amounts owed in 2011, the city of Ann Arbor waived its roughly $700,000 share.

In 2011, the DDA used a year-to-year interpretation of the Chapter 7 language instead of computing rate of growth against the base year in a cumulative fashion. That is a point that the Chapter 7 revisions would clarify.

Before giving initial approval on April 1, but postponing its vote on April 15, the council had previously postponed voting at its March 18, 2013 and March 4, 2013 meetings.

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