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

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

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

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

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

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

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

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

Brownfield Grants: Policy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brownfield Grants: 618 S. Main

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

Brownfield Grants: 618 S. Main – Commentary

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

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

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

Brownfield Grants: 618 S. Main – Board Deliberations

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

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

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

-

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

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

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

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

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

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

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

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

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

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

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

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

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

DDA board member Newcombe Clark.

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

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

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

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

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

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

Parking System

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

Parking System: Monthly Report – Break in Trend

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

Ann Arbor public parking system: Total revenue

Ann Arbor public parking system: Hourly patrons

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

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

Parking System: Demand Management – Maynard, Liberty Square

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Surface Lot Leases

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

Surface Lot Leases: Background

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

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

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

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

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

Surface Lot Leases: Board Deliberations

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

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

Library Lot

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

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

Library Lot – Public Commentary

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

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

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

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

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

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

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

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

Library Lot – Board Response

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

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

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

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

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

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

Library Lot: Public Commentary – Reprise

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

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

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

Annual Budget Adjustment

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

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

DDA board member Roger Hewitt.

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

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

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

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

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

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

Communications, Committee Reports

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

Comm/Comm: State Street

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

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

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

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

Comm/Comm: R4C Zoning Review

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

Comm/Comm: Near North

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

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

Absent: Keith Orr, Joan Lowenstein.

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

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

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

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

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

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

The move comes as the opening of the new underground parking structure on South Fifth Avenue, offering around 700 additional total spaces, is set to open by the start of the Ann Arbor art fairs, which this year run from July 18-21. Monthly permits for some of the spaces will be offered at the new structure, which will add to the five public parking structures where permits are available: Ann & Ashley, Forest Avenue, Fourth & William, Liberty Square (Tally Hall), and Maynard.

Under a demand management strategy, prices of monthly permits at the underground parking structure are likely to be lower  than at other structures.

[Google Map of parking structures with monthly permits] [.jpg of map of parking structures with monthly permits]

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

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

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

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

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

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

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

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

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

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

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

Parking

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

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

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

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

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

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

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

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

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

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

-

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

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

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

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

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

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

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

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

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

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

Construction Convergence: Library Lane

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

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

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

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

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

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

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

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

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

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

Future Use of Midtown City-Owned Parcels

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

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

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

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

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

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

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

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

Downtown Behavioral Issues

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

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

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

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

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

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

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

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

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

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

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

Business Climate Downtown

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

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

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

Sidewalk, Street Repair Millage

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

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

Public Art, Design

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

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

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

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

New Chair

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

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

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

On the Horizon

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

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

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

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

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

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

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

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

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

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

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

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

Underground Parking Garage

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

Underground Parking Garage: Impact of  Construction on Businesses

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

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

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

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

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

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

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

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

Underground Parking Garage: Construction Update

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

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

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

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

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

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

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

Parking Revenue: go!pass Program

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Parking Revenues: Status of getDowntown Staff

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

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

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

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

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

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

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

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

Regular Parking Report

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

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

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

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

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

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

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

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

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

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

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

The Varsity at Ann Arbor

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

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

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

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

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

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

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

Communications, Committee Reports

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

Comm/Comm: Retail Recruitment

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

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

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

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

Comm/Comm: Energy Grants

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

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

Comm/Comm: Future Use of City-Owned Lots

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

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

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

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

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

Comm/Comm: Fruit, Vegetable Bike Racks

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

Comm/Comm: LED Lighting Company

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

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

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

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

Annual Meeting: Officer Elections

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

Gary Boren, newly elected chair of the DDA board.

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

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

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

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

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

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

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

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

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

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

Annual Meeting: Committee Mergers

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

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

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

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

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

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

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

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

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

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

Annual Meeting: Tokens of Appreciation

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

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

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

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

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

Absent: Sandi Smith.

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

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Last Thursday, news of a breach in the earth-retention system of a downtown Ann Arbor construction site had reached all the way to Detroit’s Channel 4 News. Channel 4 sent a crew Friday evening to file a report. It was tagged on the Channel 4 website with the summary: “An Ann Arbor construction project is sinking, literally.” Chalk that up to the hyperbole of television news.

Top: View to the northeast along Fifth Avenue from Valiant Partners' concept for a conference center and hotel, proposed for the top of the Library Lot underground parking garage. Bottom: Breach in the earth retention system for the underground parking garage currently under construction on the Library Lot.

While the roughly 640-space underground parking garage, being built by Ann Arbor’s Downtown Development Authority, is not sinking in any way, a conference center and hotel proposal for the top of the underground structure might be sinking.

At first glance, the 190,000-square-foot project proposed by Valiant Partners Inc. seems like it’s on a path to approval by the city council. In November 2010, an advisory committee – charged with evaluating responses to a city of Ann Arbor request for proposals issued in late 2009 – finally settled on the Valiant proposal as the best of the six the city had received.

That decision came with the aid of Roxbury Group, a consultant hired to help evaluate the proposals and to negotiate an agreement with a developer. At an early March meeting of the advisory committee, a Roxbury representative presented a draft letter of intent, which had been worked out by Valiant and Roxbury, to be signed by the city of Ann Arbor and Valiant. The committee voted unanimously to recommend that the city council consider the letter of intent.

Then, on March 14, the city council held a work session on the proposed conference center. The council heard essentially the same presentation about the letter of intent that Roxbury had made to the advisory committee. The council is scheduled to consider the letter formally at its second meeting in April, which is now scheduled for Tuesday, April 19, to accommodate the first night of Passover. The letter of intent calls for a development agreement to be presented to the city council within four months of signing the letter of intent – which would mean sometime near the end of August 2011.

But I think it’s clear at this point that a development agreement between Valiant and the city of Ann Arbor to develop the Library Lot would not achieve the necessary eight-vote majority for an actual real estate deal. That’s why I think the city council might vote down the letter of intent – even if there are at least six councilmembers who would support going forward with the letter, which is all it would take for the letter’s approval.

I base that conclusion on remarks made by councilmembers at the March 14 work session, and regular politics as reflected in the council’s history – both recent and ancient. But before considering politics, let’s dig into some really ancient history – the kind measured in geological time – to gain some additional insight into why a pile of dirt spilled unintentionally into the underground parking garage construction pit.

Earth-Retention Wall Breach

On Thursday afternoon, March 24, a sinkhole appeared behind the Jerusalem Garden and Earthen Jar restaurants, on the north side of the underground garage construction site. Where did that dirt go? It had poured through a small breach in the earth-retention wall about 30-feet below grade.

Earth-Retention Wall Breach: Jerusalem Garden

When I visited Jerusalem Garden on Friday morning, owner Ali Ramlawi was preparing for regular business after the sinkhole had forced the evacuation of his restaurant the day before.

That morning, he seemed even a little more exasperated than he did in October 2010, when he’d addressed a meeting of the DDA board during the time reserved for public comment. On that occasion he’d ticked through a variety of concerns, including the underground parking garage, which he called the DDA’s “civil engineering project.” Ramlawi was also one of the plaintiffs in a lawsuit filed in August 2009 over the construction of the garage.

On Friday, Ramwali told me how one of his employees had driven over the spot where the sinkhole opened up, just 10 minutes before the earth gave way. He considered it just lucky that nobody got hurt.

Earth-Retention Wall Breach: Geology – It’s Sand, Man

So how exactly does dirt that far down pour through a gap that appears to be just a few feet wide?

To get a better idea of why that might happen, I talked to Kevin Foye. Foye is a Ph.D who works as a project engineer with CTI & Associates, a civil engineering firm in Wixom, Mich. How earth settles and moves is part of Foye’s specific area of expertise – he recently gave a lecture as part of the University of Michigan’s Department of Civil and Environmental Engineering Geotechnical Engineering Seminar Series, called “Differential Settlement of Landfill Foundations Modeled Using Random Fields.”

As it happens, Foye had taken photos of the construction site a few weeks earlier, and was somewhat familiar with the site. He described how not all soil is the same – it’s some combination of sand, silt and clay. The Library Lot site in Ann Arbor, he continued, is a little different – it’s predominantly sand. So it’s going to be more apt to move through a slot like the one that opened up in the retention wall.

The make-up of the soil at the site as predominantly sand was also reported by then-library board member, and geologist, Carola Stearns in a presentation she gave to the board back in September 2010. She described the site as 55 feet of coarse, well-bedded, well-sorted sand and gravel – the product of glacial activity.

And at the end of the day Friday, I spoke with Pat Podges, the Christman Company’s construction manager on site; he also described how the dirt on the site would just run through your fingers when you pick up a handful.

Earth-Retention Wall Breach: Don’t Tear Down that Wall

On Friday, Podges also confirmed that the earth-retention system used at Ann Arbor’s Library Lot site is the same one the Christman Company had previously used in building an underground parking garage in Grand Rapids, as part of the Michigan Street Improvement project. The Ann Arbor Downtown Development Authority awarded the pre-construction services contract to Christman back in August 2009, partly based on the strength of that experience.

Site of the breach in the earth-retention wall at the site of the Library Lot construction. The view is to the north.

The earth-retention system was also familiar to Foye, who described what he’d seen when he’d visited the site a few weeks ago. Visitors to downtown Ann Arbor last summer will likely remember seeing the tall drill operating on the site and the vertical pieces of steel that were then pounded into the holes – down to the silt layer that the water table sits on. Those vertical pieces of steel were subsequently encased in concrete.

Between each pair of steel-beam reinforced concrete columns, additional inner columns were poured – but not reinforced with steel beams. Podges described how for most of the steel-reinforced pairs, two additional columns were poured between them, but for some pairs, three additional columns were poured. The idea is that the columns between the steel beams interlock with each other, wedging against the steel beams.

This specific earth-retention system, called a “tangent wall” system, is used on the north face of the site, but not everywhere. Podges explained it’s used there because it’s better at preventing water from entering the pit than an alternative wood lagging system, which is used in some other locations. In the wood lagging system, heavy timbers span the vertical steel beams.

Chronicle readers might remember that outgoing DDA chair John Splitt received a memento of appreciation for his service, which was fashioned from a piece of timber left over from the wood lagging system.

A bucket is filled with gravel before getting hoisted over to back-fill the sinkhole.

In addition to the structural elements of the basic earth-retention wall, additional supporting elements include: (1) “whalers” – steel beams that are bolted horizontally across vertical members; and (2) “tie-backs,” which are essentially guy wires installed into the face of the wall.

To install tie-backs, Foye explained that a small-diameter hole is drilled from the face of the wall on the pit side, around 30-50 horizontal feet into the surrounding soil. That hole is filled with high-strength grout. A steel rod is inserted into the hole and bolted to a bearing plate on the face of the wall. That rod is then tensioned with a hydraulic jack to the pressure that’s been calculated to be appropriate for that specific location, then locked off at that specified pressure. Foye said in these kinds of applications, the pressure would be in the tens of thousands of pounds.

When construction of the parking garage is complete, the retention wall elements will remain in place, even though they won’t actually be needed to hold back the earth, Podges told me. The floors of the deck, which are braced against each opposing wall, will provide adequate opposing force. The tensioned tie-backs nearer to the surface will likely be de-tensioned, Podges said, because if someone were excavating years from now and hit one of the rods, it would be best for it not to be under tension.

A construction worker prepares to release the load of gravel into the sinkhole. Note the safety tether attached to his harness. In the background is the Ann Arbor District Library building, to the south of the construction site.

It’s apparent, from looking at photos as well as at the site itself, that the element that failed was part of one of the inner columns in the tangent wall system. And it failed at a point just below a horizontal reinforcement (a “whaler”) that was bolted onto the face of the retention system. That whaler spans six of the steel-beam reinforced columns. Foye said that based on photos he’d seen, it appeared that for some reason, there was a loss of the interlock between the inner columns – it would take further investigation to figure out what was different on Thursday from all the days before, during the time the pit has been open.

Podges said that the analysis of why the breach occurred is being done by Soil and Materials Engineers Inc., the company that designed the retention system. But they’ve determined that the problem was isolated. They’ve checked all the motion monitors that are attached to various points of the earth-retention wall, as well as the surrounding buildings – and everything is still in the same place, Podges said. Visual inspection of the perimeter has revealed no obvious other problems.

By Friday morning, a Christman crew had begun filling in the sinkhole with coarse gravel. The night before, a concrete cap had been poured over bags of gravel that had been dropped in to plug the breach from the sinkhole side. Additional repairs will need to be undertaken to the pit side of the wall – they appeared to be partly underway on Saturday morning, when I passed by the construction area. A team of workers on a platform had been lowered by crane to the breach point.

According to a briefing email sent out early Sunday morning by Susan Pollay, executive director of the DDA, among other measures, ground-penetrating radar will also be used to check for any other voids that might have developed.

What Is the City Council Thinking?

The closest thing we have to ground-penetrating radar to detect any voids in the heads of city councilmembers is simply to pay attention to what they say, when they do their work in public view. And based on that kind of radar, I don’t detect any voids on the conference center issue – but it does look to me like there could be sufficiently solid opposition to doing a real estate deal, that the council could vote down the letter of intent before even getting to that point.

City Council: Work Session – Background

At the city council’s March 14 work session about the conference center proposal, the Roxbury Group’s David Di Rita walked the council through the draft letter of intent. He’d done the same thing for the RFP review committee at its March 8, 2011 meeting. Here’s how the 190,000-square-foot project breaks down, as described in the draft letter of intent:

(i) Core elements:

• 150 hotels units – 87,000 sq. ft.
• Conference center – 26,000 sq. ft.
• Restaurant/Retail – 6,000 sq. ft.
• Public space/Plaza

(ii) Additional elements

• Office space – up to 48,000 sq. ft.
• Residential condos – up to 22,000 sq. ft.

That square footage breakdown is slightly different from Valiant’s original proposal, which included 12 condo units compared to the six in its revised proposal. More significantly, the size of the conference center in Valiant’s revised proposal is 6,000 square feet smaller than the 32,000-square-foot facility in the original proposal.

At the March 14 city council work session about the proposed Valiant conference center: (left to right) Sandi Smith (Ward 1), Stephen Kunselman (Ward 3), Mike Anglin (Ward 5) and Tony Derezinski (Ward 2).

The reduction in condo units and the size of the conference center is offset by the possible addition of up to 48,000 square feet of office space. [See page 27 of the .pdf for Roxbury Group's report, submitted in November 2010, for a breakdown of the contrast between Valiant's original and revised proposals.]

DDA board member Newcombe Clark has expressed some skepticism to The Chronicle that prevailing rental rates for office space in downtown Ann Arbor would be adequate to support new construction of office space. [Clark has worked in real estate, most recently with Jones Lang LaSalle, but is no longer with that firm.]

But it’s the revised configuration of the square footage that has allowed Valiant to eliminate from its proposal a request that the city of Ann Arbor issue bonds to fund the project’s construction. The use of public bonds as a financing tool has been described as a deal-breaker, even by the chair of the RFP review committee, Stephen Rapundalo, who represents Ward 2 on the city council. And Rapundalo is widely perceived as one of the strongest supporters of a conference center at the Library Lot location.

Remaining in the letter of intent, however, is a requirement that the city of Ann Arbor would own the conference center. Valiant has pitched this as a benefit to the city, but it carries with it potential for liability as well.

City Council: Work Session Views – Legal Ownership

It was the conference center ownership question that drew the specific attention of Sabra Briere (Ward 1) during the work session. She told the Roxbury Group’s David Di Rita that the whole proposal seemed to be predicated on a belief that the city of Ann Arbor wants to own a conference center. Di Rita responded in a way that suggested that the ownership question is not a closed issue and could be subject to further discussion.

Briere’s reply was fairly sharp. She told Di Rita that maybe there is stuff in the letter of intent that doesn’t need to be in there.

The city’s relationship to the conference center, as described in the draft letter of intent, is one of ownership. The city would have an agreement with the developer whereby the developer would manage the center. And just as long as the developer holds that management agreement, the city would not be liable for costs related to operation and maintenance.

The draft letter of intent also describes how the developer could itself use the money being paid to the city for development rights, to develop the conference center. That strategy only makes sense in a scenario where the city owns the center. It reduces to this: At least part of the compensation the city would get for allowing the developer to build the project – instead of a lease payment or property taxes – is ownership of the conference center.

But ownership does not translate directly to a financial benefit to the city, any more than ownership of additional parkland does. Stephen Rapundalo (Ward 2) has frequently pointed out that continued acquisition of additional parkland, without an adequate revenue source for maintenance, has led Ann Arbor to a situation where it can maintain the parkland it has only with great difficulty. And the same principle applies to ownership of a conference center.

So far, Valiant has tried to make its financial offer more attractive to the city by eliminating the need for the city to issue bonds. It’s conceivable that the letter of intent the council considers on April 19 will continue that trend by eliminating the requirement that the city own the center, and that Valiant will find some other way to pay for that part of the deal.

But right now, we’re presented with a tale of a profitable project that even the teller of the tale apparently doesn’t believe. Frankly, I believe that a place where you can host a 1,200-person conference in downtown Ann Arbor without breaking a sweat would be a well-used and welcome facility. You could imagine some kind of center of intellectual inquiry – that’s not necessarily a university – sprouting up in concert with the Ann Arbor District Library’s downtown location. Indeed, Valiant representatives have talked a lot about their desire to partner with the library.

But I don’t think Valiant really trusts their own narrative. If they did, we would not see a proposal for the city to issue bonds, or for the city to own the conference center, or any other creative approach to financing. Instead, we’d see a straight-up offer to lease or purchase development rights for some dollar figure.

What should that dollar figure be? Before the work session began, local developer Peter Allen told The Chronicle that a rule of thumb for land value would be 10-20% of the total value of the planned development. So if you’re planning to build a $54 million project, then $5.4 million would be a low-end ballpark number for the land value.

You might make a case that the city should accept a somewhat lower offer than Allen’s rule of thumb. An outline of that case might go something like this: (1) Look, this conference center of intellectual inquiry that we’re going to build is not going to be as profitable as, say, a project consisting of mostly residential units, and here’s why; (2) A conference center is going to have a greater positive economic impact to the downtown than just residential units would have, and here’s why; (3) You should be willing to accept a slightly lower direct financial return to the city of Ann Arbor’s general fund, in exchange for a greater positive economic impact overall, and here’s what that impact looks like.

If Valiant were inclined to make that kind of offer, however, I think they’d already have done that – between November 2010 and March 2011, when they negotiated the draft letter of intent with the Roxbury Group. But a simple, straightforward lease or purchase of development rights did not emerge from that negotiation.

The letter of intent is to be considered by the council at its April 19 meeting. Among the revisions to be added to the final draft of a letter of intent is language that makes clear that the city of Ann Arbor will not bear any risk. It’s not yet clear what linguistic form those revisions would take.

Work Session: Work Session Views – Ownership of Advocacy

Near the conclusion of the March 14 work session, Marcia Higgins (Ward 4), who was chairing the session in mayor John Hieftje’s absence, floated a question about who would take responsibility for making revisions to the letter of intent. Here’s how she put it: “Who owns those revisions now?” City administrator Roger Fraser indicated that he felt revisions fell now into the category of “staff work” – the RFP committee’s work was done, he said.

Higgins question about “ownership” of a specific task – like revising a document – could just as well be asked about the entire conference center proposal. Up to now, the project seems to have been owned by Roger Fraser. He first introduced the council to the existence of Valiant’s proposal at the 2009 budget retreat.

Chronicle file photo from the January 2009 Ann Arbor city council budget retreat. City administrator Roger Fraser, left, talks with Christopher Taylor (Ward 3). They're looking at conceptual drawings for a possible conference center on top of the underground parking garage now being built at the Library Lot between Fifth and Division streets.

On that occasion, he’d announced the existence of a proposal for a conference center, and told councilmembers they could look at the conceptual drawings. But he would not disseminate the proposal publicly – at the request of the proposers.

Later, it was revealed he’d done that against the explicit advice of the council.

With Fraser’s departure at the end of April to become a deputy treasurer for the state of Michigan, it’s not clear who might take ownership of Valiant’s proposal on the city’s side to make sure that an acceptable development agreement is struck, based on a letter of intent. Even if Susan Pollay, the DDA’s executive director, might seem a logical candidate to champion the project through to completion, her remarks at the work session suggest she’s not necessarily publicly embracing that kind of role.

Pollay began the work session by telling the council that she was there as a city staffer. The RFP had been issued through the city’s community services area, and only a few months after the RFP was issued, the community services area administrator, Jayne Miller, left the city to take a different position. Because the project was of interest to her, Pollay said, she’d volunteered to help out as needed. But she stressed that the project is not a DDA project – she’s just assisting.

Before the March 14 work session: Susan Pollay, executive director of the DDA, and David Di Rita of The Roxbury Group, which acted as a consultant for the RFP review committee.

On the council itself, Sandi Smith (Ward 1) might be a logical choice to champion the project through to final approval. In fact, at least as far back as March 2009, Smith has pushed specifically for planning some kind of use on the top of the underground parking structure. On that occasion, she introduced a successful resolution at the DDA’s March 2009 board meeting that articulated the DDA’s readiness to support the planning process for the top of the structure.

But as recently as the March 21, 2011 city council meeting, Smith has demonstrated that she can be a fiscal hard-ass, who might give priority to the city’s near-term bottom line over long-term overall economic impact. At that meeting, she was the sole voice of dissent in voting against an amendment to a state grant application that prioritized support for a skatepark over improvements to the Gallup canoe livery. She had established during deliberations that the canoe livery improvements would necessarily add revenue, whereas the skatepark was a question mark.

With the current murky level of detail available, use of the top of the parking garage as additional surface parking might actually mean more for the city’s bottom line than striking a deal with Valiant. And at the March 14 work session, Smith described the conference center proposal as “one of the largest decisions that I will have had to make in my brief tenure here.”

So I don’t think Smith is likely to pursue the conference center with the single-minded bull-doggedness of purpose that would likely be required for its eventual approval. The project needs someone to champion it who is absolutely dedicated and practically blind to all other options, if it’s to win ultimate approval from the council, and I don’t think Smith is that person.

As chair of the RFP committee, Stephen Rapundalo would also be a logical candidate to take ownership of the project – even if the committee’s work is over. But to be successful, whoever takes ownership of the project will need to enjoy a certain amount of deference from the council as a whole. And based on deliberations at the March 7, 2011 council meeting, his fellow councilmembers aren’t willing to give Rapundalo that deference, even when he clearly has earned it.

On that occasion, the council voted, over his objections as chair of the council’s liquor license review committee, to allow the appointment of a single hearing officer for liquor license non-renewal hearings – Tony Derezinski (Ward 2) – instead of appointing the entire committee as the hearing board. Any councilmember who voted with Derezinski on that – which was everyone except for Sabra Briere (Ward 1) and Marcia Higgins (Ward 4) – gave little weight to Rapundalo’s record of service on the council’s liquor committee since its very creation back in 2007. So I think the council is unlikely to show Rapundalo any deference when it comes to the conference center development agreement.

Work Session Views: Decision Time?

Historically, the Ann Arbor city council’s inclination has been, whenever possible, not to make a decision at all. The current status of the city’s Argo Dam is a good example of that. In early 2009, the city embarked on a public engagement process about the Argo Dam, which led the community to believe that the city council would be making a major policy decision that summer about leaving the dam in place or removing it.

But the council has never voted on the issue, which formally leaves the question open, though from a practical point of view, the dam is still in place. Margie Teall (Ward 4) and Carsten Hohnke (Ward 5) have remained vigilant in making sure that subsequent decisions made the council – like approving construction of a portage-free bypass around the dam – don’t necessarily preclude the dam’s eventual removal.

From the time of the Library Lot RFP issuance, councilmembers were eager to stress that the issuance of the RFP did not represent a decision to develop any of the proposals that might be submitted. After receiving proposals, it was again stressed that the city was under no obligation to accept any of them. And after identifying Valiant as the best of the six proposals received, the RFP review committee stressed that there was no obligation to do a deal with Valiant.

At the work session, councilmembers again appeared eager to downplay the significance of approving a letter of intent. Sandi Smith (Ward 1) characterized it as a “going steady” phase, with a prenuptial agreement to be possibly realized in the form of a development agreement. Margie Teall (Ward 4) indicated she was satisfied with David Di Rita’s characterization of the letter of intent as an outline to get to a final deal, but not the deal itself.

But at the RFP committee meeting in early March, Eric Mahler indicated his skepticism that the letter of intent did not place an obligation on the city to see the negotiations through to the proposal of an actual real estate deal. Mahler, an attorney, represented the city’s planning commission on the committee.

And at the council’s work session, the same concern about the contractual nature of the letter of intent was expressed by Stephen Kunselman (Ward 3), who did little at the session to hide his overall displeasure with the whole proposal. He stated flatly that he felt the arrangement being proposed was “very squirrelly,” and offered up his assessment that when the city went fishing for development proposals, “we catch nothing but leeches that want to suck on the public dollar.”

Even if Kunselman’s colleagues on the council may have rolled their eyes at his rhetorical flourish, they likely took to heart his point about the contractual nature of the letter of intent. It’s not “just another step” in the process where the city can take any action, or no action, for any reason at all. This is, in fact, a decision point of some kind that requires a proposal to come before the council.

What kind of decision point does the letter of intent represent? I think it’s somewhat similar to appointing a study committee to make a recommendation on establishing a historic district in a particular area. The council has a recent record to show that appointing a committee does not necessarily result in establishing such a district. At its July 6, 2010 meeting, the council rejected a study committee’s recommendation that a historic district be established along Fourth and Fifth Avenues, just south of the Library Lot. I can imagine that some councilmembers might even draw upon that episode as an analogy: Just as appointing a committee did not obligate us to vote for a historic district, we are not obligated to approve the development agreement that emerges in four months time after the letter of intent is signed.

But I think that for any councilmembers who appeal to that analogy, there will be others who are persuaded by a different historical episode involving the non-appointment of a historic district study committee – at the council’s Oct. 20, 2008 meeting. The committee in question would have studied an existing district, the Old Fourth Ward, to consider removing one property from the district. Then representing Ward 3, Leigh Greden argued against even appointing a committee, independent of what recommendation the committee might eventually make. Here’s how The Chronicle reported Greden’s sentiments:

Councilmember Leigh Greden suggested that if a recommendation came back from the committee to remove the property, he still did not imagine he could vote for its removal – acknowledging that he’d perhaps made that conclusion too soon.

Put coarsely, if you’re going to vote no later, you might as well vote no now.

At the March 14 city council work session: Carsten Hohnke (Ward 5).

I think some councilmembers might follow that same logic in weighing their vote on the letter of intent between Valiant and the city of Ann Arbor – a letter that is supposed to lead to a development agreement. An additional factor playing into that logic is that the real estate deal associated with the development agreement will need eight votes for approval by the city council.

So even if the letter of intent might have sufficient votes for approval, the real estate deal already looks like it will fall short of the eight-vote requirement.

Based on their remarks at the work session, Briere and Kunselman are likely no votes, as is Mike Anglin (Ward 5). At the work session, Anglin recited a laundry list of criticism of the project, from insufficient public process to the project’s lack of viability.

Anglin’s Ward 5 colleague, Carsten Hohnke, expressed his view at a 2010 Democratic primary election forum that the conversation about what should go on top of the library should start fresh, with a clean slate:

Hohnke said he is not convinced that any of the proposals that had been submitted are good ones, and it’s important to remember that a request for proposals does not need to be acted on by the city. If none of them meet the satisfaction of the community, there’s no need to accept one, he stressed.

Hohnke continued that he would like to see a renewed effort of community conversation – starting from a blank slate, with no preconceptions. What is the best solution for this vital parcel right in the center of our community?

Hohnke’s contribution to the March 14 work session conversation hinted that he was still thinking along the lines of starting fresh. He asked Rapundalo to review for the council how the RFP committee had winnowed down the six proposals to the final two proposals, both of which called for some kind of hotel and conference center. Among the six proposals that did not make the final cut was one for a community commons put forward by Alan Haber and Alice Ralph – who both attended the work session. [Chronicle coverage from January 2010: "Hotel/Conference Center Ideas Go Forward"]

Mayor John Hieftje’s vote could be purely political. It was Hieftje’s penchant for using the privilege of voting last in any roll call vote, to cast such purely political votes, that finally led the council in 2006 to change its rules for roll calls. The start of a roll call vote now rotates among councilmembers.

With four likely votes against the letter of intent – Anglin, Briere, Kunselman, Hohnke – there’s sufficient safety in those numbers that Hieftje could join them. With potentially five votes against the letter of intent, it’s hard to see how Valiant or other councilmembers would want to invest time and energy in putting together a development agreement that’s not going to meet the eight-vote minimum.

Certainly in the past, the council has been reluctant to proceed with only thin majorities. In early 2005, DDA board members were told that there were at least six votes in support of the 3-Site Plan to develop city-owned downtown properties – all the plan needed to go forward. But then councilmembers Leigh Greden and Chris Easthope counseled against placing the 3-Site Plan on the council’s agenda, in order to generate additional support on the city council. By late in 2005, the public engagement process had actually seemed to diminish rather than increase council support, and the 3-Site Plan never made it to the council’s agenda.

Conclusion: Get the Dirt out of the Hole

Besides offering a rule of thumb for calculating land value, at the March 14 work session Peter Allen also told me he thinks the entire Library Lot block needs to be master planned, before trying to develop that individual parcel. For a course he teaches at the University of Michigan, Allen assigned his students in 2009 to complete an exercise like that. [Chronicle coverage: "Column: Visions for the Library Lot"]

Restarting the conversation about the Library Lot – as Hohnke suggested back during his 2010 Democratic primary campaign – is a process that would be consistent with Allen’s suggestion to master plan the whole block. That conversation could take place in the context of a proposal currently being worked out by the DDA and the city that would assign the DDA responsibility to facilitate the development of other uses for downtown city-owned surface parking lots. That proposal, however, is currently stalled.

I think any use of the space above the underground parking garage needs to be considered as a coherent part of the city’s thinking, not just with respect to that entire block, but also in connection with the Ann Arbor Transportation Authority’s countywide transportation plan, the possible construction of a new downtown library – which has been put on hold, but might re-emerge – and even the current discussion of a corridor improvement authority along Washtenaw Avenue.

The sooner the city council votes down Valiant’s specific proposal for its conference center, the sooner we can settle into a process that might well produce a community consensus for a different kind of conference center – one that includes a real vision for the kind of inquiry and collaboration that might take place at the conferences such a center might host.

Valiant’s proposal is, I think, like the pile of dirt that poured through the breach in the retaining wall, piling at the bottom of the underground parking garage site. As a guy in a hardhat told me Thursday morning, the pile of dirt wasn’t hurting anything, but it was in the way. Valiant’s current proposal is like that pile of dirt, because it just needs to be cleaned out of the hole for now. If we need more dirt, there’s plenty more where that came from.

We shouldn’t adopt the attitude that if we let Valiant’s conference center proposal sink out of view, we’ll lose forever the opportunity to enjoy the benefits that a conference facility in downtown Ann Arbor might bring.

Why do I think that? It’s because I believe in second-hand learning. At the DDA’s January 2011 board meeting, management assistant Joan Lyke’s last one before her retirement, she addressed a few remarks to the board, summarizing what she’d learned working at the DDA.

On Lyke’s bulleted list was this: “If an idea is good, it will always resurface.”

Left to right: AATA board members Jesse Bernstein, Roger Kerson and Anya Dale. The group fell one short of the four needed to constitute a quorum. (Photos by the writer.)

A quorum – the minimum number of board members needed in order to conduct business – consists of four members for the seven-member AATA board.

In attendance were Roger Kerson, Anya Dale – who were both recently appointed to the board – plus board chair Jesse Bernstein. The usually cheerful Bernstein seemed a bit glum, when he announced  that no quorum would be achieved.

Bernstein told the handful of people assembled in the room – members of the public and the AATA staff – that he was “sorry and disappointed” and offered his apologies. He noted that it was the first occasion of a meeting scheduled at the library, and that the CTN staff were on hand to ensure the proceedings were videotaped. “See you next month!” he concluded.

At the board’s Feb. 17, 2010 meeting, the question of a change of venue for the board’s meetings was entertained, but not voted on. At the next month’s March 24, 2010 meeting, the board voted to change the bylaws to specify the downtown library as the new meeting location. The rationale was to provide better accessibility to the board’s deliberations by making use of the library board room’s video taping equipment. The AATA board room is not similarly equipped.

The change to the library location for AATA board meetings was delayed until August while physical accessibility issues were addressed, in connection with the construction of the new underground parking garage along Fifth Avenue. From the  June 23, 2010 board meeting:

During public commentary, Clark Charnetski, who was there to deliver the report from AATA’s local advisory council (LAC), noted that the library had been made more accessible, because the removal of the flower box on the Fifth Avenue side had been completed and there is a new ramp to the William Street side. That should make it a lot easier to get from the A-Ride (para-transit) stop on William Street. People could watch for the mini-bus to arrive. He thanked the AATA for any role that they had in helping that process along. Bernstein said that staff had been diligent. Ford indicated that an intercom system would be installed in the library to aid in alerting riders of the para-transit system when their rides were there.

On Thursday, one of the members of the public who appeared at the scheduled meeting, only to be disappointed, was Carolyn Grawi of the Ann Arbor Center for Independent Living. She told The Chronicle that although the new ramp was ADA compliant – its shallow slope did not trigger a requirement for handrails – it was dangerous just the same. The danger arises from the side of the ramp opposite the slope, where there is a step. The step is highlighted with yellow marking, but can be missed, she said. Grawi told The Chronicle that the previous Friday, a woman using a walker had fallen off the edge.

Orange cones have now been placed along the edge of the ramp to help prevent future mishaps.

View looking west from the library's entrance on the east side of Fifth Avenue. The construction barrels are part of the street closing in connection with the construction of the underground parking garage.

The fourth-floor library board room affords a spectacular view of the underground parking structure currently under construction. This view looks east. This is the "dogleg" of the structure that extends to Division Street.

This view is to the north from the library board room.

Present: Jesse Bernstein, Roger Kerson, Anya Dale.

Absent: Charles Griffith, David Nacht, Sue McCormick, Rich Robben.

Next regular meeting: Thursday, Sept. 16, 2010 at at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [confirm date]

John Splitt holds the commemorative plaque he received last month as outgoing chair of the Ann Arbor Downtown Development board. It's fashioned from earth retention lumber from the underground parking structure currently under construction along Fifth Avenue.

Splitt strolled into the cafe, having walked from his dry-cleaning business, Gold Bond Cleaners. “It’s located on Maynard Street, just on the other side of the arcade,” he said, motioning toward Nickels Arcade, a covered passage connecting Maynard and State.

State Street holds a special significance for Splitt as the gateway to his community involvement. In 2004, Splitt joined the board of the State Street Area Association, an experience he described as an educational process, that “opens your eyes to some of the larger downtown issues.” Once on the association’s board, his interest in community service continued, and in 2006 he was appointed to the board of the Ann Arbor Downtown Development Authority (DDA).

Splitt has served on the DDA board since then and for the past year has served as chair. Joan Lowenstein was elected the new chair at the board’s recent annual meeting, which immediately followed the board’s monthly July meeting.

The view from just outside Gold Bond Cleaners – looking east across Maynard Street to Nickels Arcade, a pedestrian passage leading to State Street.

When asked what issues have been especially memorable during his time on the DDA, Splitt cited the underground parking structure currently under construction on the city-owned Library Lot at South Fifth Avenue. The project, which began construction in October 2009, will include 600 parking spaces. The bond payments for the project are planned to be made out of the DDA’s parking revenues.

The garage includes environmental elements, with the DDA project website touting LED lights and recharging stations for electric cars. The underground parking structure is only part of what the DDA’s website hails as a “new core area redevelopment project,” including “new water mains and electric capacity, a new alley, midblock street and extensive pedestrian improvements.”

The parking structure has been a central focus of Splitt’s time on the DDA, as he is chair of the DDA’s capital improvements committee. Though the underground structure has already begun construction, an ongoing and vibrant discussion remains on what to put on top of the structure once it’s built. During our conversation at Espresso Royale we didn’t discuss that topic explicitly.

However, city officials have been struggling to find an appropriate development proposal for the 1.2-acre lot. In late November last year, six proposals were made for the lot, ranging from an urban park to a hotel and conference center.  By January, the Library Lot Request for Proposal (RFP) Advisory Committee – of which Splitt is a member – had eliminated four of the proposals, leaving two proposals for a hotel and conference center.

Recently, the conversation about what goes on top has been revived as steps are being taken to hire a consultant to evaluate the financial merit of the remaining proposals, using $50,000 provided by the DDA. Stephen Rapundalo, a city council representative for Ward 2, gave an update indicating a re-start to the months-dormant process at a July council council meeting.

As part of current talks, the city and the DDA have been considering how the DDA might take on the primary role in spurring downtown development, specifically that of city-owned surface parking lots within the DDA district boundary. That empowerment of the DDA may impact how future committees similar to the Library Lot RFP Advisory Committee are organized. While Rapundalo chairs the Library Lot RFP Advisory Committee, it’s conceivable that DDA members might chair similar committees in the future.

Though the DDA’s future leadership in downtown development is uncertain, Splitt’s commitment to the DDA has been clear. Before adding community involvement to his list of other obligations, Splitt paused to clear his extracurricular plate. He admitted, “I was pretty involved in my other hobbies and work up until five or six years ago.”

One such hobby: softball. Having grown up playing baseball, Splitt resorted to fastpitch softball due to the lack of opportunity to play baseball as an adult. “It’s amazing how much time that occupied, both in the summer and the rest of the year,” he said. Yet Splitt quit the sport in favor of the State Street Area Association board and, ultimately, the DDA. Splitt describes a simultaneous dry-cleaning decline since 2006, which he said “works out well for the DDA and volunteer work, because I have a little bit more time to devote to that.”

Nevertheless, Splitt said he always finds time to appreciate Ann Arbor.  When asked what it is he enjoys doing downtown, Splitt answered simply, “Walk, eat, and drink,” echoing the State Street Area Association website’s motto: “Shop, eat, live, work, and enjoy entertainment in the heart of Ann Arbor.” Soon, Splitt will find it even easier do just that, as he and his wife are planning to move into the downtown area from one of the leafy neighborhoods near Eberwhite Woods. They’ll relocate to the western edge of downtown, just inside the DDA district.

He explained the decision to move, saying, “I think that we [he and his wife] both are downtown people. We like being close to our businesses, we like the energy of downtown and have grown tired of yard work.” Splitt’s wife, Judy Splitt, is the owner of Salon 344 on the corner of Ashley and William.

Looking west across State Street, through Nickels Arcade. On the other end of the arcade, on Maynard Street is Splitt's dry cleaning business, Gold Bond Cleaners. To the right is Espresso Royal, where the interview for this article took place.

While Splitt’s enthusiasm for his yard might be slack, he is still entirely industrious in his involvement with the State Street Area Association. Most recently, he volunteered at the State Street Art Fair, one of the main events the association runs. When I relayed a personal story of being stuck in the basement of the Michigan Union because of tornado sirens while recently trying to go to the art fair, Splitt eagerly interrupted, adding “A false tornado warning! They sounded the sirens by mistake. That was not a good thing. It hurt sales, certainly.” He continued by saying the State Street Art Fair is especially “cool” because of the mix of artists and merchants.

Splitt’s four-year term on the DDA is done this year, though he has made it clear to the mayor that he hopes to be reappointed. He says with an amiable smile, “So I keep showing up until I’m either reappointed or replaced.”

[Editor's note: The city council agenda for Aug. 5, 2010 indicates a nomination of Bob Guenzel to serve on the DDA board. Guenzel retired as Washtenaw County administrator in May 2010. There's no indication if Guenzel is to replace Jennifer S. Hall or Splitt, both of whose terms ended July 31.]

About the author: Hayley Byrnes is an intern with The Ann Arbor Chronicle.