The plan covers 400-408 N. River St. and 107 E. Cross St., an historic property that has been declared ”functionally obsolete and blighted.” That qualifies the project as a brownfield under the state’s brownfield redevelopment financing act (Public Act 381), which allows the owner to receive reimbursements for eligible activities through tax increment financing (TIF). Approval also will allow the developer to apply for Michigan Business Tax Credits. The property is currently owned by Thompson Block Partners LLC, led by Stewart Beal of Beal Properties.

Beal plans to create 16 “luxury lofts” in the structure’s second and third floors, and up to 14,000 square feet of commercial space in the remainder of the site. The project is estimated to cost about $7 million.

The resolution passed by the board also ends a previous brownfield plan for part of the same site, which was approved in 2008. A fire in 2009 delayed the project. The new plan now covers the 107 E. Cross, which was not part of the original plan, and includes public infrastructure improvements, such as streetscape enhancements along North River Street.

The Washtenaw County brownfield redevelopment authority approved this plan at its March 6 meeting. Subsequently, the plan was approved by the Ypsilanti city council on March 18. The city council’s action included approving an “Obsolete Properties Rehabilitation” certificate, which freezes local millages at the current, pre-development level for 12 years. Because of that, the project’s TIF capture will apply only to the state’s school taxes.

The project can get up to $271,578 in eligible cost reimbursed over a 12-year period, for activities including brownfield plan and work plan preparation, limited building demolition, selective interior demolition, site preparation and utility work, infrastructure improvements, architectural and engineering design costs, asbestos and lead abatement, and construction oversight.

The intent of the state’s brownfield redevelopment financing is to support the redevelopment of urban sites that will increase the municipality’s tax base. Tax increment financing allows an entity to capture the difference between the taxable value before a project is undertaken, and the value of the property after it’s developed.

A public hearing on this proposal was held at the April 2 meeting, when the board also voted to give initial approval to the plan. Only one person – Tyler Weston, representing Thompson Block Partners – spoke, telling the board that it would help the project. Weston attended the April 16 meeting, but did not formally address the board. There was no discussion on this item.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The plan covers 400-408 N. River St. and 107 E. Cross St., an historic property that has been declared ”functionally obsolete and blighted.” That qualifies the project as a brownfield under the state’s brownfield redevelopment financing act (Public Act 381), which allows the owner to receive reimbursements for eligible activities through tax increment financing (TIF). Approval also will allow the developer to apply for Michigan Business Tax Credits. The property is currently owned by Thompson Block Partners LLC, led by Stewart Beal of Beal Properties. Beal’s father, Fred Beal, attended the April 2 meeting but did not formally address the board.

Beal plans to create 16 “luxury lofts” in the structure’s second and third floors, and up to 14,000 square feet of commercial space in the remainder of the site. The project is estimated to cost about $7 million.

The resolution given initial approval by the board also ends a previous brownfield plan for part of the same site, which was approved in 2008. A fire in 2009 delayed the project. The new plan now covers the 107 E. Cross, which was not part of the original plan, and includes public infrastructure improvements, such as streetscape enhancements along North River Street.

The Washtenaw County brownfield redevelopment authority approved this plan at its March 6 meeting. Subsequently, the plan was approved by the Ypsilanti city council on March 18. The city council’s action included approving an “Obsolete Properties Rehabilitation” certificate, which freezes local millages at the current, pre-development level for 12 years. Because of that, the project’s TIF capture will apply only to the state’s school taxes.

The project can get up to $271,578 in eligible cost reimbursed over a 12-year period, for activities including brownfield plan and work plan preparation, limited building demolition, selective interior demolition, site preparation and utility work, infrastructure improvements, architectural and engineering design costs, asbestos and lead abatement, and construction oversight.

The intent of the state’s brownfield redevelopment financing is to support the redevelopment of urban sites that will increase the municipality’s tax base. Tax increment financing allows an entity to capture the difference between the taxable value before a project is undertaken, and the value of the property after it’s developed.

A public hearing on this proposal was also held at the April 2 meeting. Only one person – Tyler Weston, representing Thompson Block Partners – spoke, telling the board that it would help the project.

This brief was filed from the boardroom of the county administration building, 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The plan relates to a renovation of an abandoned 77,700-square-foot warehouse at 140 Buchanan in the city of Chelsea. The company plans to invest more than $4 million in the project, according to a staff memo that accompanied the Oct. 16 resolution.

Brownfield status allows the company to be reimbursed for up to $376,805 in eligible activities through tax increment financing (TIF). The total amount to be captured through TIF over 16 years is $580,677, which includes fees paid to the county brownfield program administration and the county’s local site revolving remediation fund.

A public hearing took place at the board’s Oct. 16 meeting. It occurred after midnight and only one person – Lara Treemore Spears of ASTI Environmental, a representative from the project – spoke briefly. She indicated that two company officials had been at the meeting but left around 11:30 p.m.

There was no board discussion on this item before the final vote on Nov. 6.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

The plan relates to a renovation of an abandoned 77,700-square-foot warehouse at 140 Buchanan in the city of Chelsea. The company plans to invest more than $4 million in the project, according to a staff memo that accompanied the Oct. 16 resolution.

If the project is given brownfield status, it would allow the company to be reimbursed for up to $376,805 in eligible activities through tax increment financing (TIF). The total amount to be captured through TIF over 16 years is $580,677, which includes fees paid to the county brownfield program administration and the county’s local site revolving remediation fund.

The public hearing took place after midnight and only one person – a representative from the project – spoke briefly. She indicated that two company officials had been at the meeting but left around 11:30 p.m.

A final vote is expected on Nov. 6.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

Since the city of Ann Arbor joined the Washtenaw County Brownfield Redevelopment Authority (WCBRA) in 2002, brownfield projects located in the city must receive approval by the county board. The state’s brownfield program offers incentives for redevelopment of property that’s contaminated, blighted or “functionally obsolete.”

The 544 Detroit St. project is seeking brownfield status so that it will be eligible for brownfield tax increment financing. The site plan calls for a three-story “flatiron-style” building, located at the triangle tip of Detroit and North Division, just southwest of the Broadway bridge – the site of a long-abandoned gas station in the Old Fourth ward Historic District. The new building would include offices on the first floor and residences on the upper two floors.

According to a staff memo, up to $698,773 of local and state taxes will be captured for eligible activities, administrative costs, and the Washtenaw County brownfield redevelopment authority local site remediation revolving fund over an estimated 25-year period. The county’s annual millage revenues on that site is estimated to increase from about $277 now to $6,150 after the period for brownfield tax increment financing is completed. [.pdf of 544 Detroit St. brownfield plan]

For Packard Square, located at 2502-2568 Packard St., approval related to an amendment to the project’s original brownfield redevelopment plan, which the county board approved after much debate on May 18, 2011. At that same meeting, the board approved a $1 million grant application to the state Dept. of Environmental Quality for brownfield cleanup at the proposed $50 million development. That grant was later awarded to the project. The project entails building more than 200 apartments and 20,000 square feet of commercial space at 2502-2568 Packard Street.

The amendment to Packard Square’s brownfield plan would add two eligible activities that qualify for brownfield tax increment financing: underground parking and urban stormwater management infrastructure. Those activities are now eligible for TIF, following changes by the state legislature to the Brownfield Redevelopment Act 381 in December 2012. According to a staff memo, the total TIF-eligible activities will now be $3,582,222. Over the 14-year period of the plan, up to $5,840,557 of local and state taxes will be captured for eligible activities, administrative costs, and the Washtenaw County brownfield redevelopment authority local site remediation revolving fund. This amount is unchanged from when the plan was initially adopted.

County millage revenues from the property will increase from about $8,701 annually to $64,138 after the period for brownfield tax increment financing is completed. [.pdf of Packard Square brownfield plan amendment]

Both plans had been recommended for approval by the county’s brownfield development authority at its June 6, 2013 meeting.

Public hearings were held for both projects at the county board’s meeting on July 10. In addition to representatives of the developers, the only other speaker was Thomas Partridge.

Commissioner Ronnie Peterson (D-District 6) raised some procedural concerns about the approval process. He felt the public hearing should be held prior to the initial vote at the board’s ways & means committee meeting. Peterson also objected to taking the final vote on the same night as the initial vote. [Typically, an initial vote is taken at the ways & means committee – on which all board members serve – followed by a final vote at the regular board meeting two weeks later. For most of the year, the ways & means committee and regular board meetings are held every two weeks, in back-to-back sessions on the same night. During the summer, those meetings are held only once a month.]

To protest the process, Peterson cast the sole vote against both brownfield plans on the initial vote at the ways & means committee meeting, but joined all other commissioners in supporting the plans in the final vote at the board meeting.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

Since the city of Ann Arbor joined the Washtenaw County Brownfield Redevelopment Authority (WCBRA) in 2002, brownfield projects located in the city must receive approval by the county board. The state’s brownfield program offers incentives for redevelopment of property that’s contaminated, blighted or “functionally obsolete.”

The 544 Detroit St. project is seeking brownfield status so that it will be eligible for brownfield tax increment financing. The site plan calls for a three-story “flatiron-style” building, located at the triangle tip of Detroit and North Division, just southwest of the Broadway bridge – the site of a long-abandoned gas station in the Old Fourth ward Historic District. The new building would include offices on the first floor and residences on the upper two floors. The project’s site plan received a recommendation for approval by the Ann Arbor planning commission on Dec. 18, 2012. Both the site plan and brownfield plan are expected to be on the council’s June 17 agenda, according to city planning manager Wendy Rampson.

For Packard Square, the July 10 hearing relates to a proposed amendment to the project’s original brownfield redevelopment plan, which the county board approved after much debate on May 18, 2011. At that same meeting, the board approved a $1 million grant application to the state Dept. of Environmental Quality for brownfield cleanup at the proposed $50 million development – that grant was later awarded to the project. Demolition is underway, with plans to build more than 200 apartments and 20,000 square feet of commercial space at 2502-2568 Packard Street.

The amendment to Packard Square’s brownfield plan would add eligible activities that qualify for brownfield tax increment financing, including underground parking and urban stormwater management infrastructure. Those activities are now eligible for TIF, following changes by the state legislature to the Brownfield Redevelopment Act 381 in December 2012.

In addition to the public hearings on July 10, the county board will likely take action on both brownfield items at that meeting.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The board gave final approval to a brownfield plan for Ford Motor Co’s Rawsonville plant, after holding a public hearing on the plan earlier in the meeting. The plan would allow Ford to apply for $625,000 in Michigan Business Tax credits. According to a staff memo, the plan – with the potential tax credits – would allow the company to retain 260 jobs by bringing back work that’s currently done in China and Mexico. Investment in 2012 would be about $20 million, with total jobs stabilized at about 700 workers.

Commissioners also give initial approval to a brownfield plan for Arbor Hills Crossing, a proposed retail and office complex at Platt and Washtenaw. The Ann Arbor city council approved the plan at its Dec. 5 meeting, and final approval from the county board will likely occur at its Jan. 18, 2012 meeting, when a public hearing is set. The project involves tearing down three vacant commercial structures and putting up four one- and two-story buildings throughout the 7.45-acre site – a total of 90,700-square-feet of space for retail stores and offices. Three of the buildings would face Washtenaw Avenue, across the street from the retail complex where Whole Foods grocery is located. The site would include 310 parking spaces. The brownfield plan includes $6.7 million in tax increment financing to be paid back over a 19-year period.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

Symbolic paper cranes were on display at the May 18, 2011 meeting of the Washtenaw County board of commissioners. The cranes represent the number of people in the county last year who used homeless support services. On screen in the photo’s background is Michael Appel of Avalon Housing, urging commissioners to support such services. (Photos by the writer.)

After much discussion, commissioners gave final approval to a brownfield plan for the Packard Square project, which will help fund environmental cleanup on the site of the former Georgetown Mall. The board also approved a $1 million grant application to the state Dept. of Environmental Quality for brownfield cleanup at the proposed $48 million development. Commissioner Wes Prater voted against the brownfield plan and the grant application.

The board postponed action until June 1 on a $1 million loan application to the MDEQ, as well as a request to authorize designation of the county’s full faith and credit as a guarantee for any loan that might be awarded, up to $1 million. They also discussed but ultimately postponed action on a broader public-private investment policy they’re developing, a policy spurred in large part by the request to back the MDEQ loan.

The policy discussion will likely be pushed back even further. At a May 24 briefing to review the June 1 agenda, commissioners learned from county staff that The Harbor Cos., developers of Packard Square, decided not to apply for the MDEQ loan. In light of that decision, the board is expected to take more time to flesh out details for its policy on public-private investment. And some commissioners – notably Leah Gunn – aren’t sure such a policy is even necessary. [Full Chronicle report on the May 24 briefing: "Loan Request Pulled for Packard Square"]

The other major item on the May 18 agenda related to funding for local human services nonprofits. The recommendations were made as part of a coordinated funding approach, combining support from the county, the city of Ann Arbor, the United Way of Washtenaw County, and the Washtenaw Urban County. More than 20 people spoke on the issue during public commentary, urging continued support for the county’s most vulnerable residents.

Commissioners were asked to give initial approval to $507,500 in human services funding for 2011. Additional funds for 2012 and 2013 were also approved, contingent on the board’s passing those budgets later this year – it’s possible that allocations will change, as the county works to eliminate a $17.5 million deficit. Commissioner Dan Smith voted against the allocations, citing an objection to one line item. He later clarified for The Chronicle that he objected to funding for Planned Parenthood.

The board acted on several other items during its May 18 meeting, including: (1) approval of a brownfield plan for LaFontaine Chevrolet in Dexter; (2) setting the 2011 rate for the county’s general operating millage; and (3) initial approval to hire Experis (formerly known as Jefferson Wells) to perform internal auditing services for the county.

The board also gave inital approval to apply for a federal Dept. of Justice grant worth nearly $500,000 to support the Washtenaw County Cyber Citizenship Coalition (WC4). Commissioner Kristin Judge, who spearheaded the WC4 initiative, reported that Gov. Rick Snyder has asked the coalition to host with him a statewide “cyber summit” later this year.

Funding for Human Services Nonprofits

Commissioners were asked to give initial approval to a resolution allocating $507,500 in children’s well-being and human services funding for 2011. The board was also asked for tentative approval of additional funds in 2012 and 2013, contingent on the board’s approval of those budgets later this year.

The allocations for these awards were recommended by a coordinated funding review committee. The process is being managed by the joint county/city of Ann Arbor office of community development, which is coordinating the funding efforts of the county, the city of Ann Arbor, the United Way of Washtenaw County, and the Washtenaw Urban County. [.pdf of funding recommendations]

The county board of commissioners approved this coordinated funding approach at its Nov. 3, 2010 meeting. Commissioners had been briefed on the effort at an Oct. 7 working session, and most recently discussed the process at its May 4 meeting. The Ann Arbor city council, at its meeting on Monday, May 16, tabled action on its human services allocations – along with all other budget-related items – until a continuation of the meeting, which is now set for May 31.

Human Services Funding: Public Commentary

About 20 people addressed the board on the topic of funding for human services. Many of them represented nonprofits that provide basic services, like food and housing, and many of them had previously spoken during public commentary at the Ann Arbor city council. Three people objected to funding of Planned Parenthood of Mid and South Michigan.

This report summarizes their remarks, organized thematically.

Human Services Funding: Public Commentary – Housing

Susan Beckett of Scio Township told commissioners that she’s a volunteer working with Groundcover News, a monthly publication focused on issues of poverty and homelessness. It’s sold on the streets by vendors who are homeless, and she’s been told they’re the nicest vendors in the country – that’s because of the support services that are available to them, she said. These are people whose lives have been destroyed and whose future is horribly uncertain, she said, but you don’t see the kind of desperation in their faces that you see in others.

When Beckett moved to Scio Township about 20 years ago, it was during the last recession and her home was broken into more than once. “I don’t want to see us go back to that kind of desperation, where people are doing whatever they can to make ends meet,” she said. Beckett said the county’s Justice Project Outreach Team (JPORT) used to provide tents to the homeless. Recently a man she knows went to get one, but JPORT has stopped that service. The Delonis Center – the county’s homeless shelter – is full, she said, so the man has to sleep under a bridge.

Brian Nord talks with Julie Steiner before the May 18 county board meeting. Both spoke in support of continued funding for human services. Nord is board president for the nonprofit MISSION, which supports Camp Take Notice. Steiner is executive director of the Washtenaw Housing Alliance.

Brian Nord told commissioners that he’s lived in Ann Arbor for 6.5 years, and has worked for the last 2.5 years with Camp Take Notice. [Nord is president of the board for MISSION, a nonprofit that supports the camp.] There’s the lowest spot that people can reach on the grid, he said – Camp Take Notice is a step above that. Right now, there are already 30 people at the camp. Last year, it took until the end of the summer to reach that number, he said. People need support services, he said. “Where are they going to go if there’s no place to go after Camp Take Notice?” [Camp Take Notice and MISSION don't receive money from the coordinated funding pool.]

Jim Reisinger of Dexter spoke in support of Alpha House, run by the Interfaith Hospitality Network of Washtenaw County. It provides a good return on investment for county dollars, he said. Focused on families, the nonprofit provides shelter, food, counseling and other services. Volunteers contribute the equivalent of $330,000 in donated hours – that’s a good return, he said. [The funding ecommendations call for IHN to get $92,400 in funding.]

Three people spoke on behalf of the Ozone House, which provides shelter and other services for youth. Colleen O’Brien, who works at the drop-in center in Ypsilanti, thanked commissioners for their support. The drop-in center helps primarily African-American, low-income youth who have no place else to go, she said. Ten years ago, she said, they had about 100 visits each month – now there are 500 monthly visits from young people looking for a safe place to stay or a meal. Ozone House couldn’t provide its services without support from the county, she said. [The coordinated funding committee is recommending a total of $208,557 for Ozone House programs, including $97,625 from the county.]

Tyra Weatherspoon and Patricia Gwinner also came forward to talk about their support for Ozone House, saying they were there to speak on behalf of youth who need the services provided by the nonprofit. Gwinner said she knows what it’s like to be homeless. She asked: If the county cuts funding, where will young people go to get the help they need?

Ellen Schulmeister, director of the Shelter Association of Washtenaw County, told commissioners that the county has been a partner for the past 13 years – the Shelter Association couldn’t do its work without the county’s support. She gave the example of Matthew, one of the men who came to the Delonis Center, the county’s homeless shelter in Ann Arbor that’s run by the association. He thought he owned 40 Internet businesses and that he was a friend with the University of Michigan president. The staff at Delonis helped him, she said. Schulmeister asked the board not to give up on Matthew or any of the 1,300 other individuals that they see at the shelter. [The Shelter Association is slated to receive a total of $316,649 in coordinated funding.]

Charlie Andenberg, a case manager at the Delonis Center, gave an example of a woman who came to the shelter after she was laid off from her job and became homeless. She lacked health insurance, which exacerbated her medical problems. The example illustrated the need for social support services.

Paper cranes from Avalon Housing were transported to the lobby of the Washtenaw County administration building, awaiting display at the board of commissioners meeting.

Michael Appel, associate director of Avalon Housing, brought four others to the podium with him, each of them holding hangers loaded with a total of 4,738 paper cranes. The cranes represent the number of people who received homeless support services from a local agency in 2010. It’s a beautiful and stark reminder of people affected by homelessness, he told commissioners. He thanked the board for its policy leadership, including support of a task force that led to creation of the Washtenaw Housing Alliance and the Blueprint to End Homelessness. The coordinated funding approach shows that the county and other local governments and agencies can move forward together.

“The work we do saves money, ultimately,” Appel said, measured in fewer trips to emergency rooms, for example, and in more students graduating from high school and having a better opportunity for employment. They’re all leveraging money for a greater impact on the community. [Recommendations call for Avalon to get $140,974 in coordinated funding.]

Paul Lambert of Ann Arbor said he’s been a recipient of aid from Avalon Housing for more than 12 years, and a homelessness activist for many more years than that. There’s a real need for human services to be fully funded in this town, he said.

Kristen Klevering of the nonprofit SOS Community Services reminded commissioners that she had addressed them at their May 4 meeting in support of Barrier Busters. This time, she’d come with the development director of SOS, Ellen Offen, as well as a board member. She related a story about a woman with three young children who got sick and had fallen behind in her rent. The woman came to SOS recently on the verge of being evicted. SOS was able to help, and now Klevering is her case manager, working with her stay on top of things. Without the social safety net supported by the county, Klevering said, “people like her will be homeless.” [SOS is set to receive $90,859 from the county's portion, plus $124,577 from other coordinated funding.]

Human Services Funding: Public Commentary – Support Services

Barbara Niess May, executive director of SafeHouse Center, thanked the board for their support. Funding for human services from the county, city of Ann Arbor and other entities leverages millions of dollars back into the community from other sources, she said. Niess May described the services of SafeHouse, which provides a range of support – including emergency shelter and counseling – for victims of sexual assault and domestic violence. They serve people from all across the county, she said, not just Ann Arbor and Ypsilanti. The county’s funding is critical, and allows SafeHouse to leverage funds from the federal government as well as foundations nationwide. [Recommendations call for SafeHouse to receive $143,263 from the coordinated funding pool.]

Later in the meeting, Dawn Hertz of Dexter also spoke in support of SafeHouse, saying she volunteered there. Domestic violence doesn’t discriminate, she said, and SafeHouse serves all those who need their help.

Margie Hagene, chair of the board for Food Gatherers, was there to request the county’s ongoing support for that nonprofit as well as its social safety net partners. [Food Gatherers is slated to receive $87,486 in allocations from Washtenaw County's share of the coordinated funding pool.] She was aware that the county faces budget issues, but as they prepare to make tough decisions, she asked that human services not be reduced. Hagene reported that 138% more people sought food assistance from Food Gatherers and its partners in 2010 than in 2006. There is a need, she said, and they are grateful to the county for its long-standing commitment to serving the community’s most vulnerable residents.

Pam Smith, executive director of the Child Care Network, described the services of the 33-year-old nonprofit, which helps families find child care and provides scholarships to help pay for child care. Parents are successful because of the county’s support for Child Care Network, she said, noting that after food and shelter, child care is a household’s third-largest expense. [It's recommended that Child Care Network receive a total of $358,436 from the coordinated funding pool, including $218,378 from the county.]

Nancy Paul, executive director of Faith in Action, told commissioners that the nonprofit serves the Dexter and Chelsea areas, and has been providing support for residents in need for 31 years. For the past 5 years or so, they wouldn’t have been able to meet those needs without support from their alliances, including Food Gatherers. They can go after community grant funding now, because of their partnerships – if they were on their own, they wouldn’t be able to meet the needs of residents, she said. Paul urged commissioners to continue their support for human services.

Chuck Warpehoski, director of the Interfaith Council for Peace & Justice, said he knew the county was facing some difficult budget decisions, and he thanked them for their work. Caring for the vulnerable is one of the few things that diverse religious groups can agree on, he said. Because ICPJ doesn’t receive county funding, in some ways he’s a disinterested party, Warpehoski said. But as a resident, he’s not. An elderly neighbor of his with multiple sclerosis gets meals delivered to her home. Meal delivery isn’t a housing support service, he noted, but it helps her stay in her home – that’s good for her, her family and the neighborhood. It means one less vacant property on the block. The same is true for a summer youth program in Ypsilanti – families don’t have to pay for child care, so it helps them out financially. Support programs like these are good for the long-term self-interest of the county.

Lily Au of Ann Arbor spoke during two of the evening’s four opportunities for public commentary. During her second turn, she explained that her initial commentary had been a metaphor, to illustrate the need for direct funding to those in need – rather than using public funding for developers or administrative overhead. She held up a hand trowel, and explained that when residents at Camp Take Notice needed to go to the bathroom, they have to dig a hole seven inches deep to cover up the smell. These are the people who need help.

Human Services Funding: Public Commentary – Planned Parenthood

Paul Dobrowolski of Saline requested that the board not fund Planned Parenthood of Mid and South Michigan. [Funding recommendations would give a total of $67,440 to the nonprofit, including $53,040 from the county.] They don’t need the money, he argued, and many of the women they serve don’t live in Washtenaw County. Abortions account for 20-30% of their revenues, he said, and they make money from selling oral contraceptives. Their CEO was paid $167,000 in 2008, Dobrowolski said. Finally, he noted that there are alternatives available – St. Joseph Mercy Hospital and Corner Health Center in Ypsilanti provide similar services, he said.

Karen Walacavage of Ypsilanti said she was there to help commissioners understand why they shouldn’t fund Planned Parenthood. The services are redundant – they’re offered elsewhere, she said. She doesn’t want the county funding a “mega-nonprofit.” Walacavage also objected to Planned Parenthood spending money to lobby against organizations that oppose abortions.

Anne Mitzel of Milan was concerned about Planned Parenthood’s “triple-dipping” – getting money from the local, state and federal government. She said that abortions for blacks are disproportionate to the percentage of blacks in the general population. Planned Parenthood writes grants claiming they work to prevent abortions, she said, but looking at their target demographic – the black community – suggests otherwise. She concluded by saying, “We as taxpayers deserve better.”

Human Services Funding: Commissioners’ Response to Public Commentary

Several commissioners expressed thanks to the people who’d spoken. “It’s beautiful to see you here,” Yousef Rabhi told them, saying that the funding doesn’t mean anything without the people who provide the services. He noted that during the board’s budget retreat earlier this year, human services had emerged as a board priority. He hoped commissioners would keep the commentary they’d heard close to their hearts and find a palatable funding solution for everyone.

Mary Jo Callan, director of the county’s office of community development, talks with Derrick Jackson of the county sheriff’s office, prior to the start of the May 18 county board meeting. Callan’s office oversees the coordinated funding model used to allocate funds for human services nonprofits.

Kristin Judge said it was humbling to have the nonprofits thank the board, when it should be the other way around. It shows we live in a community that cares, she said. She thanked Chuck Warpehoski for putting human services into the context of the economy’s bottom line – it’s hard to quantify the net affect on tax revenue, but it’s there. Judge praised Brian Nord and Caleb Poirier, president and vice president of MISSION’s board of directors, for their work with Camp Take Notice. They’ve created a safe, amazing community, she said, that’s way more than just a step above homelessness.

Rob Turner noted that the board has talked about how the county can streamline operations so that there’ll be more funds available for human services. He noted that the board isn’t in the trenches – the people who’d just spoken to them are on the front lines. “We’re not boots on the ground – you are.” Turner said that when he served on the Chelsea school board, his favorite meetings were those when the boardroom was packed – as the county boardroom was that night. It’s important for people to come to these meetings, he said, and not just once a year. He concluded by saying that before he was elected to the county board, he hadn’t been aware of all the services and support the county offered. There is a safety net available to help people go from despair to self-reliance, he said.

Barbara Bergman said she recognized many of the people who had spoken during public commentary – many of them are friends, she said. “I wish we had more money,” she said. “I wish we could solve the problems of the county.” One of her goals, she said, is to turn every kid in this county into a taxpayer. They can do that by providing sufficient funding for schools, housing, food, recreation, mental health and family assistance, she said. “When we turn them into taxpayers, that means we can solve the problems in this county.”

Rolland Sizemore Jr. said he disagreed with Turner – the board is also in the trenches, just in a different way. They all care about the homeless, but it’s a question of what can they afford. That’s the bottom line, he said. At future meetings, other groups will come to lobby for funding too, he noted. The economy has caught everyone in a bind, he said, and they’ve never been in this position before.

Human Services Funding: Commissioner Discussion

Ronnie Peterson began the discussion by saying it was misleading to state that the board accepts these recommendations. The money isn’t there yet, he said – the board can’t commit to the funding, because they haven’t voted on the budget for 2012 and 2013.

County administrator Verna McDaniel explained that the board had already authorized $507,500 in children’s well-being and human services funding, as part of the 2011 budget that was approved last year. For the remainder of the total $1.015 million to be allocated, the assumption is that the board will allocate those funds as part of the upcoming budget process, she said.

Peterson maintained that the resolution they were being asked to approve would authorize the allocations – and that required that they authorize the funding itself. But they haven’t made a decision on the budget for next year, he noted – no money has been set aside for human services next year.

Kristin Judge said she shared some of Peterson’s concerns. She noted that when McDaniel presented a strategy for dealing with the county’s projected $17.5 million deficit in 2012-2013, one part included $1 million in cuts to human services funding. If they cut that budget, how can they stick to these funding recommendations?

McDaniel again stated that about half of the funding – $507,500 – was already allocated in the 2011 budget. In the background memo that accompanied the coordinated funding recommendations, she said, staff tried to make it clear that commissioners weren’t obligating the funds for 2012-13. She noted that in addition to the coordinated funding pool, the county funded other human services agencies for a total of about $3 million this year. All the agencies being funded know that the funding for 2012-13 hasn’t yet been set, she said.

Judge wondered what approach the county would take, if funding is cut. Would it be an across-the-board percentage from all agencies that are funded? McDaniel said that’s an option – it would depend on what the board wanted.

When Judge then asked if there was a reason why the board needed to vote on it that night, McDaniel said they wanted to move ahead on the 2011 allocations, since it had already been approved in the 2011 budget.

Judge said that in the future, it would be good to know what the strategy will be for funding cuts, if they are necessary.

Barbara Bergman argued against making across-the-board percentage cuts, saying that’s the least constructive thing they could do. She’d only support a more strategic approach, if cuts are necessary. Judge later clarified that she hadn’t been advocating for a percentage reduction, and that she agreed they should be strategic.

Dan Smith felt they needed to clarify language in the resolution. The only “resolved” clause stated that they were approving the allocations for 2011-2013, he said. The only money they’re really approving right now is the $507,500.

Wes Prater pointed out that part of the difficulty is in coordinating budget cycles for different entities. The city of Ann Arbor works on a fiscal year that begins July 1, while the county works on a calendar year. The state has yet another budget cycle, he noted – its fiscal year begins Oct. 1. He thought Peterson was correct in stating that they weren’t approving allocations beyond 2011, and he asked the county’s attorney, Curtis Hedger, whether they should change the wording of the resolution.

Hedger felt the issue was sufficiently addressed in the “whereas” clauses. However, if commissioners wanted to, they could amend the resolved clause to add that allocations are based in part on currently authorized funding of $507,500 and contingent on passage of the 2012-13 budget.

Conan Smith observed that the board goes through this process every year – it’s not unusual. Commissioners develop a two-year budget, but by law they can’t encumber the second year, and very frequently they make adjustments later. [For example, the county's 2010-11 budget was approved by the board in late 2009. Then in December 2010, the board approved adjustments to the 2011 budget as part of a budget affirmation process.]

C. Smith said he was in favor of this current funding resolution, because it put a stake in the ground and indicated their support for human services. It gives people a way to hold the board’s feet to the fire. He added that he’s 100% behind the funding recommendations, and he won’t vote for a dollar less when the board is asked to approve the 2012-13 budget.

Peterson said he clearly wasn’t advocating for cuts. But the fact is that commissioners don’t know how they’ll cut the millions of dollars they need to balance the budget, he said. It’s difficult for him to tell employees that they’ll have jobs next year, when he knows that pink slips will likely be flying in November and December. It’s the county board’s job to set the budget, he said, and they shouldn’t be delegating that role to a committee – referring to the review committee that made coordinated funding recommendations for human services. The board needs to consider the future of its employees, too, he said.

Judge took issue with C. Smith’s remarks about not making cuts to the funding recommendations. They’ve already said that there’s a target of $1 million cuts to human services funding in 2012 and 2013, she noted. She wanted to be clear with the nonprofits that if the county’s budget changes, those allocations will be different.

Yousef Rabhi felt that one of the whereas clauses could address the concerns that other commissioners were raising:

Whereas, the full award of these funds is contingent on passage of the 2012 and 2013 Budget allocation process;

Prater pointed out that budgets are estimates of both anticipated revenues and expenses. “Budgets are not written in stone,” he said. At the end of each year, they always make adjustments to the next year’s budget, he added.

Dan Smith observed that the budget process has only begun in earnest about a month ago, with the release of the county’s equalization report. He moved to amend the coordinated funding resolution as Hedger had suggested, adding to the resolved clause [italics indicate amended text]:

NOW THEREFORE BE IT RESOLVED THAT the Washtenaw County Board of Commissioners hereby approves the FY 2011-2013 Children’s Well-Being and Human Services funding awards to the nonprofit entities listed below, based in part on the currently authorized funds of $507,500 and contingent on passing the 2012-13 budget, and authorizes the Office of Community Development to negotiate contractual agreements in accordance with the County’s purchasing procedures, subject to approval as to form by the Office of Corporation Council, the annual recommendation is as follows: [.pdf of full amended resolution, with list of funding allocations for Washtenaw County]

Bergman said it would be easier to follow the discussion about the board’s resolutions if the lines of text were numbered. Deputy county clerk Jason Brooks indicated that it would be possible to do that.

Outcome: The board gave initial approval to the funding recommendations, as amended. Commissioner Dan Smith voted against the allocations, citing an objection to one line item, which he didn’t specify during the meeting. He later clarified for The Chronicle that he objected to funding for Planned Parenthood of Mid and South Michigan. For the county’s allocations, final approval is expected at the board’s June 1 meeting.

Packard Square Brownfield Proposal

On the board’s agenda were several items related to the Packard Square project in Ann Arbor, on the site of the former Georgetown Mall, including requests for approval of a brownfield plan, a $1 million grant application to the state Dept. of Environmental Quality for brownfield cleanup at the proposed $48 million development, a $1 million loan application to MDEQ, as well as a request to authorize designation of the county’s full faith and credit as a guarantee for any loan that might be awarded, up to $1 million.

Board chair Conan Smith passes out copies of the policy he drafted to guide county investment in public-private partnerships. In the foreground is commissioner Alicia Ping.

Within the context of Packard Square – prompted by the developer’s request for the county’s full faith and credit – commissioners also discussed a broader public-private investment policy, a subject they had initially debated at a May 17 special working session. Based on the discussion at the working session, board chair Conan Smith had drafted a policy that he distributed to commissioners a few hours before Wednesday’s meeting.

The Packard Square project has been the topic of some controversy at the county level. The board had been asked at its May 4 meeting to give initial approval to the grant and loan application. It was the loan guarantee that raised concerns among some commissioners, who were uncomfortable putting the county potentially on the hook for a private developer – especially since back taxes were owed on the property, and the county is facing a large deficit in the coming years.

Instead of voting on May 4, the item was taken up at a May 5 working session, and again at a special working session called for May 17.

The brownfield plan would enable the developer to use up to $5,840,558 of tax increment financing over 14 years to support cleanup of the site, where a dry cleaning business operated. In addition to cleanup activities, TIF funds would have been used to repay the $1 million loan and to pay $23,000 annually for administrative fees to the county’s economic development & energy department, which manages the brownfield program. The development includes 230 apartments, plus retail and office space. The Ann Arbor city council approved both the Packard Square site plan and brownfield plan at its May 2, 2011 meeting.

At its May 18 meeting, the county board considered these items at both their Ways & Means Committee meeting and their regular board meeting – held back-to-back. Typically, initial votes are taken at Ways & Means, then moved to the regular board meeting two weeks later.

The board also held a public hearing on the topic of Packard Square’s brownfield plan. In addition, two residents spoke about the project during the meeting’s general public commentary.

Packard Square Brownfield: Public Commentary

Local attorney Jim Fink said he was speaking on behalf of his friend and client, Albert Berriz, CEO of the real estate firm McKinley Inc., who wasn’t able to attend the meeting. Fink then read aloud a letter that Berriz sent to county administrator Verna McDaniel. Berriz called the development of the former Georgetown Mall a “very risky venture,” and that he wasn’t sure why the county would do this given its other financial challenges and limited resources.

Berriz stated that he and his partners have invested tens of millions of dollars buying and renovating real estate in the county. “We are proud to claim over 500-plus McKinley team members gainfully employed in the region operating those assets. Before we risk our county’s balance sheet in this way, I urge [you] to consider that those of us risking our own balance sheets, and creating real jobs in the county, are doing so without coming to you and asking the county to provide capital for our efforts.”[.pdf of Berriz letter]

Jim Burns of the International Brotherhood of Electrical Workers (IBEW) Local 252 in Ann Arbor said he was standing in solidarity with his colleagues in Detroit. He pointed out that Bloomfield Park – a failed commercial project by The Harbor Cos., the same developer as Packard Square – was a complete bust and a terrible eyesore. It’s partially constructed, and sits as a monument to how the developer bungled the job, Burns said. On behalf of the roughly 1,000 members of IBEW Local 252, Burns urged the county to stay out of the business of financing private development.

Packard Square Brownfield: Public Commentary – Commissioner Response

Rob Turner pointed out that the county is not investing in Packard Square – they’re not taking money away from human services to put into private development. The issue they’re considering is whether to use the county’s full faith and credit to back a loan for the developer from the state, he said. If they can help create jobs and clean up a blighted area, he added, that’s their priority – it’s not a priority simply to help a developer.

Packard Square Brownfield: Public Policy

The first issue that the board took up related to the broader public policy question about conditions for investing in public-private partnerships. Though the policy was prompted by debate over when the county should issue its full faith and credit, the policy was also being designed to apply to issuance of bonds, adoption of tax increment financing plans, or cash investments.

Board chair Conan Smith, who drafted the policy, said he tried to incorporate elements from the previous night’s working session. He reviewed the main points of the policy, which lists five criteria for investment. Projects must have: (1) a clear public benefit; (2) local government support; (3) no outstanding tax liabilities; (4) a minimal risk of loss; and (5) a limitation on the total county liability. [.pdf of full draft policy]

The final criterion – a limitation on total county liability – hadn’t previously been discussed in detail. C. Smith explained that he wanted to ensure that in the absolute worst case scenario, the county would still have three weeks of operating capital on hand and as much protection as possible, in case a project goes belly up. That part of the draft policy stated:

VII. Limitation of Total County Liability

The total liability for general obligation bonds or encumbrances of the County’s full faith and credit related to public-private partnerships shall not exceed the following limits:

i. If the County’s unrestricted fund balances are less than eight percent of regular general fund expenditures, the limit shall be three percent of regular general fund expenditures;

ii. If the County’s unrestricted fund balances are greater than eight percent but less than seventeen percent of regular general fund expenditures, the limit shall be seven percent of regular general fund expenditures;

iii. If the County’s unrestricted fund balances are greater than seventeen percent of regular general fund expenditures, the limit shall be twelve percent of regular general fund expenditures.

Wes Prater clarified that the policy referred to unrestricted fund balances of the general fund.

Washtenaw County commissioners, from right: Rob Turner, Ronnie Peterson, Barbara Bergman, Yousef Rabhi.

Barbara Bergman said she wanted to include something about the track record of the developer, their successes and failures, as well as the amount of time they’ve worked on local projects. C. Smith replied that based on their previous discussion, the consensus seemed that local government partners would be in a better position to evaluate that. In the past, it would have been handled by the county’s planning department and planning advisory board, he said, but those entities no longer exist. It would be a substantive and costly process for the county to vet developers in that way, he said.

Rolland Sizemore Jr. agreed with Bergman, saying there were too many examples of developers simply changing their company’s name after a failed project. The county should do some research on the developer before getting involved, he said.

Wes Prater wanted to include more information about the credit history of the individual or company.

Yousef Rabhi said he was a little uncomfortable with the criterion regarding local government support. That section states:

IV. Local Government Support

The County shall not invest in a project that does not have the support of the local unit of government in which it would be developed. Local government support may be evidence by any of the following:

a. Issuance of the local unit of government’s full faith and credit for the project or evidence of other financial involvement in the project;

b. Approval by the governing body of a land use plan or other development plan;

c. Resolution of the governing unit; or

d. A letter of support signed by a majority of the members of the governing body.

Rabhi said he wanted to make it stronger – the last item simply asked for a letter, and that didn’t seem sufficient. He suggested requiring two of the four items showing support, rather than just one.

Prater suggested that instead of requiring a letter of support, they could ask for a resolution of support, so that the local government would need to vote on it. Ronnie Peterson noted that some local governments have limited resources, and a resolution might be all they can offer.

Dan Smith felt very uncomfortable with the options for local government support, except for the first one – showing financial involvement. If a local municipality isn’t willing to put any skin in the game, he said, he wasn’t sure why the county should invest. In general, he wasn’t comfortable using government money to support private development except under very limited circumstances, and he wasn’t sure the policy made that clear.

Rob Turner said he wouldn’t want it to be an obstacle if a local government wasn’t capable of giving its full faith and credit – that shouldn’t stop a project. He agreed that asking for a letter of support was too weak, and preferred asking for a resolution of support instead. And they should be welcoming outside developers who haven’t previously worked in this area, he said – there are ways they can be vetted, but the county shouldn’t be putting up roadblocks.

Kristin Judge thanked C. Smith for his leadership, and said it was great they were developing a policy. However, she was concerned that they were rushing this through because of one project. Board policies are a big deal, she said, and they should take the time to flesh it out. She confirmed with Curtis Hedger, the county’s corporation counsel, that he hadn’t had time to research it.

Peterson said he was ready to take the initial vote that night. They’d had a very healthy discussion the previous evening, he said, and he felt comfortable because this was just a policy – they weren’t making any commitments to investing, and not one dime would be spent until they approved it.

D. Smith said he didn’t feel comfortable voting on something they’d just been given a few hours before the meeting. He appreciated the work involved in getting a draft done so quickly, but preferred to postpone action until the board’s June 1 meeting. Prater agreed, and moved to postpone.

Outcome: The board voted to postpone action on the policy until its June 1 meeting – voting against postponement were Barbara Bergman, Conan Smith, Ronnie Peterson, Yousef Rabhi.

Subsequent to the May 18 meeting, at a May 24 briefing to review the June 1 agenda, commissioners learned from county staff that the developers of Packard Square decided not to apply for the MDEQ loan. In light of that decision, the board is expected to take more time to flesh out details for its policy on public-private investment. [Full Chronicle report on the May 24 briefing: "Loan Request Pulled for Packard Square"]

Packard Square Brownfield: MDEQ Grant

As part of the brownfield cleanup, Packard Square developers want to apply for a $1 million loan from the Michigan Dept. of Environmental Quality. The funds would be used for removing contaminated soil on the property, as well as monitoring, testing, and other related activities.

Originally, the grant application and a $1 million loan application were presented as a single item on the agenda, but before deliberations they were separated out and considered independently.

Wes Prater asked if there were still unpaid taxes on the property. Dan Smith noted that the county treasurer, Catherine McClary, had emailed commissioners to report that back taxes hadn’t yet been paid, and that they would need to be settled before the grant could be accepted. [Earlier in the month, McClary reported that Harbor Georgetown LLC owes 2009 taxes totaling $178,025.26 and 2010 taxes of $159,845.57, if paid on or before May 31, for a total of $337,870.83. Interest increases each month. The 2009 taxes are in forfeiture – that is, if not paid by next year, the property would face foreclosure.]

Outcome: Commissioners unanimously gave initial approval for the brownfield grant application to the MDEQ for Packard Square. Later in the meeting, they also voted to give final approval for the grant, with dissent from Wes Prater.

Packard Square Brownfield: MDEQ Loan

The board was asked to consider a $1 million loan from MDEQ for the Packard Square project, as well as a request to authorize designation of the county’s full faith and credit as a guarantee for any loan that might be awarded, up to $1 million.

Loan funds would have been used to pay for some of the demolition on the site, as well as for work associated with treating the new development with vapor intrusion barriers and other measures to minimize the potential environmental hazards to the new development. The intent was for the developer to repay the loan with brownfield tax increment finance (TIF) revenue.

County staff told commissioners that an irrevocable letter of credit would be required as a condition of the county offering its full faith and credit to back the loan. Together, the loan and grant would shorten the TIF period from 18 to 14 years – after that, taxing entities would receive the full amount of taxes from that property.

During a discussion about the loan at the May 18 meeting, Yousef Rahbi said that since the board hadn’t yet finalized the public policy regarding county investments in private developments, he’d feel most comfortable moving consideration of the loan to the June 1 meeting.

Alicia Ping objected, saying they’d talked about it for hours at board meetings and two working sessions. Everyone knows how they’ll vote, she said. Kristin Judge agreed, saying she’d received an overwhelmingly negative response to the loan from the community. Barbara Bergman said that people don’t want the loan – she wasn’t sure if it was because of this specific project, or because of the broader public policy issues. At any rate, she was against postponing.

Outcome: On a 7-4 vote, commissioners postponed action until their June 1 meeting on the $1 million loan application to the MDEQ for Packard Square. Dissenting were Barbara Bergman, Kristin Judge, Alicia Ping and Wes Prater. The developers subsequently decided not to apply for the MDEQ loan.

Packard Square Brownfield: Brownfield Plan

Yousef Rabhi began the discussion by noting that this is a traditional brownfield plan, just like many others they have previously approved. There is no use of the county’s full faith and credit, he said, and the developer can’t get any TIF (tax increment finance) revenue until the project is completed. Nor can TIF revenue be tapped if taxes aren’t paid. [.pdf of Packard Square brownfield plan, without attachments]

Outcome: The board gave initial approval of the Packard Square brownfield plan at its Ways & Means Committee meeting, with dissent from Wes Prater.

Rabhi moved that the brownfield plan and grant be forwarded immediately for consideration at that evening’s board meeting, when commissioners could take a final vote.

Outcome: The board approved moving both the Packard Square brownfield plan and grant for consideration at their board meeting later that evening, with dissent from Rolland Sizemore Jr.

Packard Square Brownfield: Brownfield Plan – Public Hearing

Two people spoke during a public hearing on the brownfield plan at Wednesday’s board meeting.

Bruce Measom of Bloomfield Hills-based Harbor Companies, the project’s developer, listed several public benefits to the project. He noted that the contamination from the dry cleaning business was perched on an underground clay layer, but needed to be cleaned up – especially for residential development on the site. [According to the brownfield plan, installation of sub-slab vapor barriers to contain the contamination is estimated to cost $950,360.] Measom also highlighted the underground stormwater detention system they planned to install, noting that currently there is no management of runoff on that site.

They also plan to upgrade 1,500 feet of the city’s sanitary sewer, at a cost of about $400,000, plus make upgrades to water mains on the nearby side streets. Among the other public benefits he cited: (1) the creation of about 45 jobs after the facility is complete, plus hundreds of local construction jobs while it’s being built; (2) a new “pocket park” on the western side of the site, which will be open to the public; and (3) residential density as part of an infill project, which meets city goals.

Thomas Partridge also spoke in support of the project. He criticized commissioners for not attending Ann Arbor city council meetings to unite the efforts of the city and county. It’s disappointing, he said, that the board hasn’t done its homework about this project. This area needs the jobs that Packard Square will create. Partridge said that commissioner Yousef Rabhi, a Democrat representing one of Ann Arbor’s districts, is acting like a Republican by throwing up hurdles. He urged commissioners to advance this project.

Packard Square Brownfield: Brownfield Plan – Final Discussion

After the public hearing, the board continued discussion of the Packard Square brownfield plan. Rolland Sizemore Jr. asked Measom whether the construction jobs would be union or non-union. If they were non-union, would they abide by the Construction Unity Board (CUB) agreement? Meason said it would likely be a combination of both union and non-union jobs.

Conan Smith questioned whether CUB would apply to a brownfield project. Part of the county’s procurement policy, CUB agreements call for contractors to use union labor, or to abide by the existing collective bargaining agreements of the appropriate labor unions. Curtis Hedger, the county’s corporation counsel, wasn’t sure if the developer could be required to abide by a CUB agreement.

County commissioner Wes Prater.

Yousef Rabhi said that at a meeting of the county’s brownfield redevelopment authority board, the developer had indicated that he’d make an effort to hire local workers. They also said they’d try to find local businesses for Packard Square’s retail space, Rabhi said. He noted that the 601 S. Forest development, which had been awarded brownfield status, had received complaints from local labor unions, saying the developers there had used non-local, non-union labor. Rabhi stressed that it’s important to create jobs, but he hoped they would hire from the local skilled workforce.

Wes Prater asked Measom if his firm had talked with leaders of the county’s building trades – if they’re serious about working with labor unions, they need to start a dialogue. Measom said they’d already been speaking with local contractors, and are well into the process of soliciting bids. Because the project has received an invitation letter from the U.S. Dept. of Housing & Urban Development (HUD) for financing, they need to pre-screen contractors for their HUD experience, he said.

Prater noted that if the developer accepts HUD financing, they’ll be required by federal law to comply with the Davis Bacon Act, which requires that public works projects pay prevailing wages. In that case, Prater said, the developer might as well do a CUB agreement too, to guarantee there would be no work stoppages whatsoever.

In addition to the HUD financing – which Measom said could total $20-$22 million – Prater wanted to know what other funding sources they’d be using. Anne Jamieson-Urena – director of brownfield and redevelopment incentives for AKT Peerless Environmental and Energy Services, who’s working with the developer – said they could provide that information.

Rob Turner pressed Measom about the contractors they’d be hiring for the project. Measom said they haven’t awarded the contracts yet – they don’t have a signed construction agreement. Turner strongly urged Measom to consider local contractors for the work. He was also interested in whether the CUB agreement would apply to this project.

Rabhi told commissioners that the issue of CUB is something he hopes to discuss with the brownfield development authority board. Hopefully they can put more stringent rules in place for future projects, he said.

Alicia Ping clarified that taxes would be paid before the county accepted grant funds on behalf of the project, and that no monies would be dispersed until the taxes are paid in full. Measom noted that the developers have tax appeals pending for the 2009 and 2010 amounts, and that once they reach an agreement on that, they’ll take care of the outstanding taxes.

Outcome: The board gave final approval to the Packard Square brownfield plan, with dissent from Wes Prater.

LaFontaine Chevrolet Brownfield

On the agenda was an item asking for initial approval of the brownfield plan for the $5.3 million LaFontaine Chevrolet redevelopment project in Dexter.

Brett Lenart, left, of the county’s economic development & energy department, which manages the county’s brownfield redevelopment authority, talks with Lou Stultz of Canopus Environmental Group. Stulz is working on the LaFontaine Chevrolet redevelopment project, which is seeking brownfield status.

The LaFontaine brownfield plan would enable the use of up to $330,330 of tax increment financing (TIF) for 4 years to pay for cleanup work, including asbestos and lead abatement. Of that amount, $25,410 would support the county’s brownfield program management, and $50,820 would be deposited into the county’s Local Site Remediation Revolving Fund. The project is expected to retain 76 jobs and create 50 new ones, and to increase the annual tax revenues to the county from $4,516 to $11,119 after the TIF ends. [.pdf of LaFontaine brownfield plan, without attachments]

LaFontaine Chevrolet Brownfield: Public Hearing

Two people spoke during the public hearing. Josh Bloom of Bloom General Contracting spoke on behalf of the owner, Matt LaFontaine, in support of the brownfield plan, saying they are very excited about the project. He pointed out that it would result in LaFontaine being a LEED-certified [Leadership in Energy and Environmental Design] auto dealership. Bloom thanked the board for their consideration.

Lou Stultz – a senior project manager with Ypsilanti-based Canopus Environmental Group – was also on hand. He would be working on the project and was there to answer questions, if the commissioners had any for him. They did not.

Thomas Partridge also spoke, saying more information is needed about the project. It was an important development, he said, and he questioned why all the details about this project and Packard Square hadn’t been made available.

Outcome: Commissioners voted unanimously to give initial approval to the LaFontaine Chevrolet brownfield plan. A final vote approval is expected at the board’s June 1 meeting.

2011 County Millage Rate

Commissioners were asked to give initial approval to establish the 2011 county general operating millage rate at 4.5493 mills – unchanged from the current rate. Several other county millages – including those for parks & recreation, emergency communications and the Huron Clinton Metroparks Authority – are levied separately, bringing the total county millage rate to 5.6768 mills.

Outcome: Without discussion, the board unanimously voted to approve setting the 2011 general operating millage rate. A final vote is expected at the board’s June 1 meeting. A public hearing on the millage rate will also be held at that time.

Urban County Annual Plan

Commissioners were asked to give initial approval to the Washtenaw Urban County annual plan from July 1, 2011 through June 30, 2012. The plan must be submitted to the U.S. Dept. of Housing and Urban Development (HUD), outlining specific projects and programs that the Washtenaw Urban County will undertake with HUD funding from the federal Community Development Block Grant (CDBG) program, HOME grants and Emergency Shelter Grants (ESG).

The Urban County is a consortium of 11 local governments that receives federal funding for programs that serve low-income residents and neighborhoods.

The county is expected to receive $3,602,480 from these programs during the coming fiscal year. A $448,920 in-kind county match is required.

Outcome: The board voted unanimously to approve the Washtenaw Urban County annual plan. Final approval is expected at the board’s June 1 meeting.

Internal Auditor Contract

The board was asked to give initial approval to hire the professional services firm Experis (formerly known as Jefferson Wells) to perform internal auditing services for the county for five years. At its Dec. 1, 2010 meeting, commissioners had authorized the county administration to issue requests for proposals for these services. The county received 10 responses, and a review team narrowed the selection and held interviews with three firms. The team’s recommendation for Experis was unanimous, according to a staff report.

The total cost for internal audit work in 2011 is $87,500. It would include: (1) overall internal control review and risk assessment ($25,000); (2) more detailed internal control review for two county departments ($55,000); (3) establishing a fraud hotline ($7,500); and (4) eight hours of internal control training for county staff (no charge).

Internal Audit: Commissioner Discussion

Barbara Bergman began by saying she had a lot of questions about this item. She felt that $7,500 for setting up a fraud hotline was expensive, since there were already other ways to get information about potential fraud. She referenced the “great WCHO fraud” of 18 months ago, and said a fraud hotline wouldn’t have caught the person – she added that she wasn’t going to describe what happened, because she didn’t want to give directions for someone to repeat it.

Bergman also noted that the county has received awards for its audits. And in the context of their budget situation, the amount they’re being asked to spend each year – $87,500 – would pay for two mid-level employees, she said. The internal audit seems too generalized, and she didn’t understand the motivation for doing it.

Conan Smith said he shared Bergman’s concerns, but wondered if they could insert a one-year-out clause into the contract, which would allow them to assess performance after a year and end the contract if it wasn’t worth the expense. County administrator Verna McDaniel said they could negotiate that into the contract.

C. Smith said they might also find weak internal controls that, if modified, would result in savings to the county. He thought it was appropriate to test the process at least for a year.

Wes Prater pointed out that the county’s auditors, Rehmann, state in their letter of engagement that they aren’t doing an internal audit. They offer the county the option of hiring them to do an internal audit, he said, but he didn’t think it was appropriate to have the same firm do both jobs.

Rob Turner clarified that the cost was $87,500 per year, not the total for the five-year period.

Yousef Rabhi also felt uncomfortable with the amount, though he did like the idea of a fraud hotline. He noted that the staff memo indicated part of the work would be to assess the “tone at the top.” What did that mean? he asked. Pete Collinson, the county’s accounting manager, explained that of the different aspects of internal controls, the most important one is the “control environment” – that is, is an organization ethical? Are the board and top administrators committed to ethical values? Setting that tone has an important impact on the rest of the organization, he said.

Rolland Sizemore Jr. said he wasn’t at all happy about this contract – spending about $400,000 over five years to have someone come in and tell them how to run their business. He said he keeps asking the same thing – did staff check with other counties, to find out what peer organizations are doing?

Kelly Belknap, interim deputy administrator, told Sizemore that she knew the finance departments at some counties had their own internal control staff – Washtenaw County previously had staff do that, she said, but the task had been eliminated over the years due to budget cuts. She said she hadn’t called other counties to see how they handled internal audits.

Commissioners Kristin Judge and Rolland Sizemore Jr.

Sizemore said if the staff couldn’t pick up the phone and call other counties, “then I’ve got a major problem with that.” He said he’d support it initially, but he hoped the administration would return with some comparative information before the board’s final vote. Belknap said they’d make some calls.

Bergman asked again about the fraud hotline. What was the $7,500 buying? Sizemore said he didn’t know why they needed an outside firm to set up a hotline, when the county already had an IT (information technology) staff.

Belknap said it was a trust issue – the hotline is intended to be anonymous, but if a county department sets it up, employees might doubt that they can truly keep their identity secure. However, Sizemore elicited from Belknap that finance department staff would be checking the messages. So how did that ensure trust and anonymity? he asked.

Sizemore also objected to the fact that no one from Experis had bothered to come to the meeting, yet they wanted over $400,000 from the county.

Rabhi clarified that Collinson had been the staff member who previously did internal audits as part of his job, but Belknap said that even then the county didn’t have the resources to do audits at the same level as Experis could. Rabhi said it hurt him a little that they were hiring an outside agency for something that had been done in-house.

Belknap noted that staff issued the RFP at the request of the board. They were asked to look into this as an option, and they did the best they could, she said – even negotiating for a lower price than was originally proposed.

Wes Prater said he hoped they’d approve the contract. He reminded commissioners that a county employee had embezzled about $1 million over 16 years. He hoped the internal audit wouldn’t uncover anything, but the board is responsible for financial oversight.

Ronnie Peterson said he shared Sizemore’s concerns, and wanted more comparative information. Overwhelmingly the county’s employees are loyal and devoted, he said, but things happen. He suggested that employees could be trained to do the internal audits in the future.

Bergman proposed an amendment that called for a one-year contract, rather than the originally proposed five-year period. Prater objected, preferring C. Smith’s suggestion of negotiating an opt-out clause after a year.

Outcome: The amendment passed, with dissent from Wes Prater and Alicia Ping.

Outcome on full resolution: Commissioners unanimously approved the resolution as amended to shorten the contract to one year, with the possibility of extending the contract over additional years. A final vote is expected at the board’s June 1 meeting.

Cyber Crime Prevention Grant

On the agenda was an item for initial approval to apply for a federal Dept. of Justice grant worth nearly $500,000 to support the Washtenaw County Cyber Citizenship Coalition (WC4), a community‐policing model focused on preventing cyber crime.

The grant would support the hiring of a senior management analyst, with the goal of creating and distributing the WC4 “best-practice toolkit” to other communities nationwide. The funding would also help develop a pilot program that would be set up to respond to cyber crime complaints. Similar to 911, it would be a single number that could be called if someone falls victim to a cyber crime. WC4 is working with the FBI Cyber Division in Washington, D.C. and the Southeast Michigan United Way 211 program on this initiative.

Outcome: Without comment, commissioners approved the grant application to support the work of WC4. Final approval is expected at the board’s June 1 meeting.

Later in the meeting, Rolland Sizemore Jr. commended Kristin Judge for spearheading the WC4 initiative – she received a round of applause from the board. Judge reported that Gov. Rick Snyder has asked the coalition to host with him a statewide “cyber summit” later this year. She said it doesn’t hurt that David Behen – Washtenaw County’s former deputy administrator – is now in Lansing. [Behen is the state's chief information officer.]

Weatherization, IT Collaboration, Veterans Affairs Director

Commissioners gave final approval to several items that were initially approved at its May 4 meeting.

The board voted to accept funding from a U.S. Dept. of Energy weatherization assistance program that would provide $241,863 in federal dollars to the county. Administered by the county’s Employment Training and Community Services (ETCS) department, the funding would help weatherize 31 properties for eligible residents – homeowners or renters with a family income at or below 200% of the federal poverty level ($45,088 for a family of four).

The hiring of Michael G. Smith, Jr. as the county’s veteran services director, effective May 23, 2011, was also given final approval.

Also approved on May 18 was an interagency agreement with the city of Ann Arbor and the Ann Arbor Transportation Authority (AATA), allowing the two entities to collaborate with the county on technology services. [.pdf file of draft interagency agreement] The agreement includes an extension, through 2015, of the contract for a network manager job that’s shared between the county and city. That contract, first signed in 2008, expires in June of 2011. The two entities save about $81,577 annually because of the shared position. The board also gave final approval to share costs with the city for a deal with the firm EMC, paying for storage area network and backup services.

Misc. Communications, Public Commentary

Some commissioners made reports during the time available for communications from the board.

Kristin Judge highlighted a letter they’d received from the American Federation of State, County and Municipal Employees (AFSCME) Michigan Council 25, asking for a letter from the board opposing state House bill 4059. The bill would limit the times when labor could meet with county administration, which AFSCME felt should be a decision for local officials to make. [.pdf of AFSCME letter to the board]

Judge told her fellow commissioners that she planned to bring a resolution to an upcoming meeting, to support AFSCME on this issue.

Barbara Bergman passed out brochures with information on the Regional Alliance for Health Foods, noting that the Washtenaw Community Health Organization (WCHO) is participating in the program. The school-based health centers provide services to Ann Arbor Public Schools, Ypsilanti Public Schools and the Willow Run Community Schools.

Misc. Public Commentary

Thomas Partridge spoke during the evening’s six opportunities for public commentary, including the two public hearings reported above, for a total of 26 minutes. During his four other public commentary times, Partridge pressed two primary themes: (1) criticism over the county’s handling of the Packard Square and LaFontaine Chevrolet brownfield projects; and (2) the need for better representation by elected officials at all levels.

He called for the support of a recall effort against Gov. Rick Snyder, and noted that President Barack Obama has backed away from his commitment to the American people. Partridge said it’s incumbent upon everyone to make sure that there are competent candidates to contest elections at all levels.

Partridge also expressed concerns about the integrity of local law enforcement officials, and objected to the use of medical marijuana. He called for a countywide master plan to deal with controlled substances.

Commissioners Response to Public Commentary

Yousef Rabhi wanted to clarify that the brownfield plans had received scrutiny – a long process had occurred before they were brought to the board for approval. In addition, the board had discussed it at previous meetings – including a special working session the previous night, devoted to policy issues related to public-private partnerships, and to the Packard Square proposal. The resolution they had approved earlier that evening, he noted, was so that Packard Square developers could apply for a state grant – county money isn’t being given away.

Present: Barbara Levin Bergman, Kristin Judge, Ronnie Peterson, Alicia Ping, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner.

Absent: Leah Gunn

Next regular board meeting: Wednesday, June 1, 2011 at 6:30 p.m. at the county administration building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [confirm date] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public comment sessions are held at the beginning and end of each meeting.

Grace Singleton, a managing partner with Zingerman's Deli, talks about plans to apply to the local and state brownfield program as part of the deli's renovation plans. The business hosted a public meeting about the plans on June 21. (Photos by the writer.)

On June 21, Zingerman’s hosted a public meeting to answer questions about their plans for the brownfield application. Matt Naud, the city’s environmental coordinator, was on hand as well, and distinguished between this project and those that are typically associated with the term “brownfield.” In the case of Zingerman’s Deli, “it’s economic development,” he said, “It’s not about environmental cleanup.”

Specifically, brownfield status would allow Zingerman’s to be eligible for tax increment financing (TIF), a mechanism that would let the business recoup certain qualified expenses related to the project – possibly as much as $817,000 over 15 years.

It’s a different approach than the brownfield application most recently approved by city council for the Near North affordable housing project on North Main. In that case, the site’s need for environmental cleanup qualifies it for a brownfield status. Zingerman’s application also differs from Near North’s in that Near North isn’t seeking reimbursement through TIF. Both projects plan to apply for Michigan Business Tax credits.

Though Zingerman’s mailed out 1,014 postcards to surrounding residences and businesses to announce the meeting, only three members of the public attended, plus The Chronicle. One of those attending was Ray Detter, head of the Downtown Citizens Advisory Council. He offered at least a partial explanation for the low turnout: The city’s Historic District Commission was holding a reception at the same time for its annual preservation award recipients – lots of people were at the Hands On Museum for that event, he said. One of the winners – Quinn Evans Architects – is also the architect for the Zingerman’s expansion.

There’s perhaps an even more crucial HDC connection to the project: Assuming Zingerman’s secures site plan approval from city council, they would still need to seek a “notice to proceed” from the commission. If denied, the project can’t move forward as planned.

At a city of Ann Arbor brownfield plan review committee on Monday, the “what if” question was raised by Marcia Higgins, one of three councilmembers who serves on that committee. They were meeting to review the project’s brownfield plan and make a recommendation to council, which is expected to consider both the site plan and brownfield plan at their July 19 meeting. While affirming Zingerman’s commitment to that location, Rick Strutz, a managing partner in the deli, said that as a business decision, at the end of the day if the project doesn’t get HDC approval, they’d likely have to move.

How the Brownfield Program Works

The Michigan legislature passed the Brownfield Redevelopment Financing Act – Act 381 – in 1996. The law allows local municipalities to set up brownfield redevelopment authorities and to use various financing mechanisms to promote the cleanup and redevelopment of contaminated properties. It was later amended to include sites that are designated as “blighted” or “functionally obsolete” – Zingerman’s is seeking the “functionally obsolete” designation. The latter two categories are designed to promote economic development.

Brownfield status allows projects to get reimbursed for certain qualified expenses via tax increment financing (TIF). Redevelopment of a site increases its taxable value – the difference between its original taxable value and the new value is the “increment.” In the case of Zingerman’s Deli, the business paid $49,100 in real property taxes in 2009. A preliminary estimate by the owners is that their taxes would increase to $107,000 when the project is complete.

After tax revenues are collected, the owners of approved projects apply to get repaid out of the funds available from the “increment.” The TIF is authorized for only a certain period – after that, all tax revenue is kept by the taxing authorities.

The act also allows owners of brownfield properties to apply for Michigan Business Tax credits, which are granted by the Michigan Economic Growth Authority, or MEGA. Those credits – awarded to spur job growth and economic development – can amount to up to 20% of costs related to demolition, lead and asbestos abatement, infrastructure and other qualified expenses.

Locally, the Washtenaw County board of commissioners set up the Washtenaw County Brownfield Redevelopment Authority in 1999. Within the county, 23 municipalities have joined the authority, including the city of Ann Arbor. Because these municipalities operate under the county brownfield authority, the county board of commissioners must approve the plan before it’s submitted to the state. But first, the county requires that the local municipality sign off on the project. [.pdf file of brownfield application used for projects in the city of Ann Arbor]

The county has never rejected a brownfield plan.

As part of the process, the county charges an application fee based on the total project investment – $3,000 for projects of up to $5 million, and as much as $5,000 for projects over $10 million. The county can also take up to 10% of the total tax increment annually, for the duration of the project, for administrative expenses.

Near North, Other Ann Arbor Brownfield Plans

The Ann Arbor city council has approved one other brownfield plan so far this year – for the Near North affordable housing project on North Main. That development, just north of the downtown district, is eligible for brownfield status because of cleanup needed on the 1.19-acre site along 626-724 N. Main St., south of Summit. [.pdf file of Near North brownfield plan]

Specifically, the plan cited results from soil and groundwater samples taken in April 2009 and February 2010:

Benzo(a)pyrene, arsenic and lead were measured in soil samples at concentrations above the Part 201 Generic Residential Cleanup Criteria and Screening Levels (residential cleanup criteria) for Drinking Water Protection and/or Direct Contact.

Arsenic, barium, chromium, copper, lead, mercury, selenium, silver and zinc were measured in groundwater samples at a concentration above the residential cleanup criteria for Drinking Water and/or GSI.

Unlike Zingerman’s, Near North developers – led by the nonprofit Avalon Housing – will not seek reimbursement through TIF. But Near North does plan to apply for Michigan Business Tax brownfield redevelopment credits, which require that the brownfield status is authorized at the local level. Near North developers have identified $720,000 in eligible expenses to which the tax credits can be applied. The plan must next be approved by the Washtenaw County board of commissioners, and will likely be considered at their Aug. 4 meeting.

Beyond that, no other brownfield plans have been approved in Ann Arbor since 2008, when city council authorized three projects for brownfield status: The site of the former Michigan Inn on Jackson Road, the 601 S. Forest housing development in the South University area, and Maple Shoppes at the northeast corner of Maple and Dexter-Ann Arbor Roads, where the Aldi grocery is now located. To date, only the Maple Shoppes site has been redeveloped.

The largest brownfield plan approved by the city was for the Broadway Village at Lower Town project, which qualified for environmental cleanup. The plan, approved in 2003, requested TIF reimbursement of up to $40.4 million over a period of up to 30 years. Existing structures on the site were demolished, but otherwise the development hasn’t moved forward. On the county’s brownfield project website, its status is listed as “unknown.”

Zingerman’s Deli Expansion

Zingerman’s Deli has been working on plans for its major renovation for about four years – managing parter Rick Strutz reports that when the project team first began meeting every Tuesday morning, they didn’t think they’d still be at it 200 weeks later.

Because it’s located in the Old Fourth Ward historic district, the project needs approval from the city’s historic district commission. Business owners officially approached the HDC in 2008, asking for permission to demolish two buildings on the site – a fire-damaged house at 322 E. Kingsley St., directly behind the main deli building, and a two-story building at 420 Detroit St., known as “the orange house” or the Annex.

That request was denied, and set in motion a different approach to first seek approval for the project from the city planning commission and city council, then to return to the HDC for a “notice to proceed.” [See Chronicle coverage: "Zingerman's: Making It Right for the HDC"]

Project Timeline To Date

At the same time, the city was working through an extensive revision to its zoning ordinances, known as A2D2. Among those revisions was the rezoning of the 322 E. Kingsley parcel from residential to D2, which allows for commercial development. Here’s a timeline of the Zingerman’s project over the past two years, and related city zoning initiatives:

• June 12, 2008: Historic district commission denies request for demolition of 322 E. Kingsley St. and 420 Detroit St. [Rocco Disderide's former residence, aka "the orange house" or the Annex]
• Feb. 19, 2009: Planning commission adopts downtown plan with various revisions but no change to existing R4C zoning of 322 E. Kingsley St.
• April 6, 2009: City council gives initial approval to zoning revisions to downtown requiring alterations to the downtown plan adopted by the planning commission; major alterations include changes in South University area, but also included a rezoning of 322 E. Kingsley St. from R4C to the new D2 classification. The amendment on 322 E. Kingsley St. is introduced by Sandi Smith (Ward 1) and passes with dissent only from Sabra Briere (Ward 1). [link]
• May 19, 2009: Planning commission approves revisions to the downtown plan to accommodate part of the city council’s South University zoning revisions, an East Huron zoning revision, and the 322 E. Kingsley St. revision. [link]
• June 15, 2009: City council adopts downtown plan as revised by the planning commission. [link]
• Nov. 16, 2009: City council gives final approval to downtown zoning revisions, including the D2 designation to 322 E. Kingsley St.
• Jan. 14, 2010: At an HDC work session, Zingerman’s presents plan showing demolition of two houses.
• March 8, 2010: Zingerman’s holds a public participation open house on its proposed expansion.
• March 11, 2010: At an HDC work session, Zingerman’s presents a plan showing demolition of one house only. [link]
• May 18, 2010: Zingerman’s gets unanimous approval for its site plan from the Ann Arbor planning commission. The plan includes renovation of the Annex and demolition of 322 E. Kingsley. [link]
• June 21, 2010: Zingerman’s holds public meeting regarding brownfield application.
• June 28, 2010: Zingerman’s meets with the city’s brownfield plan review committee, which recommends approval. Both the site plan and brownfield plan are expected to be on the council’s July 19, 2010 meeting.

The site plan now calls for tearing down the house at 322 E. Kingsley and building a two-story, 10,340-square-foot addition that would be connected to the 5,107-square-foot deli building via a glass atrium. They’ll add underground tanks for stormwater detention and several environmentally-friendly design elements, including a green roof on the deli’s existing one-story wing. Phoenix Contractors of Ypsilanti is the project’s construction manager and general contractor.

All along, Zingerman’s executives have cited concerns over the project’s expense, particularly the cost of renovating the Annex. The overall project is expected to cost about $6.7 million. Roughly $500,000 is associated with renovating the house, which is relatively small – less than 900 square feet. Renovation will entail moving the Annex off its existing foundation, replacing the foundation, renovating the house, then moving it onto the new foundation and incorporating the structure into the new deli addition.

That expense was one motivation for seeking brownfield status.

Brownfield Plan Review Committee Weighs In

Because Ann Arbor has been identified by the state as a “core community,” the brownfield designation can be applied more broadly – not just for environmental cleanup, but for economic development as well, to reimburse expenses such as public infrastructure improvements and stormwater management. That’s the path that Zingerman’s is pursuing.

They’re making their case based on their track record as well as plans for future growth. Since 1982, the business has grown from four employees to around 200. Because of added capacity from the expansion, they plan to add another 40 deli employees over the next five years, and a total of 65 employees throughout all of Zingerman’s operations, which include their mail order business, bakery and creamery, among others.

One of the first steps in the brownfield process was to ask the city assessor to designate the property at 322 E. Kingsley as “functionally obsolete.” Because that property is part of the entire parcel to be redeveloped, the whole site qualifies for a brownfield under that designation. The city’s assessor, David Petrak, is expected to submit a letter to that effect this week, after it’s vetted by the city attorney’s office.

The process also includes hosting a public meeting – that happened on June 21, at the second floor of Zingerman’s Next Door, which is adjacent to the deli. Three members of the public attended.

Zingerman's Deli managing partner Rick Strutz, left, and attorney Gary Bruder, the owner's representative on the deli's expansion project, at the June 28 meeting of the city's brownfield plan review committee, held at city hall.

The turnout was much higher at the June 28 meeting of the brownfield plan review committee, which is charged with making a recommendation to city council. The committee consists of three city councilmembers – Sandi Smith (Ward 1), Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4). All of them attended Monday’s meeting, as did several city staff: Matt Naud, environmental coordinator; Tom Crawford, chief financial officer; and Matt Horning, city treasurer. Also at the meeting were Susan Polllay, executive director of the Ann Arbor Downtown Development Authority; and Brett Lenart, a Washtenaw County staff member who handles brownfield issues. Three members of the Zingerman’s team were there as well: Rick Strutz, managing partner of the deli; Gary Bruder, an attorney and owner’s representative; and Jared Belka, a paralegal with Warner Norcross & Judd, a Lansing-based law firm that’s helping with the brownfield plan.

In describing the project, Strutz told the group that their No. 1 priority is to preserve the historic brick structure that houses the deli. “We are beating the crud out of this building,” he said. The addition will allow them to move all cooking out of the old building, to eliminate the moisture and humidity that’s generated in the kitchen.

Bruder and Strutz highlighted several other aspects of the project: meeting ADA standards of accessibility; adding bathrooms and a staff breakroom; building a storage area which will allow them to take fewer deliveries, with an aim of reducing traffic congestion; sharing an area for trash and composting with neighboring Community High School, and working with students on an instructional composting project.

Strutz said the project’s general contractor, Phoenix Contractors of Ypsilanti, calls it a “surgical construction process” because of the tight site within a neighborhood setting, and the need to keep the deli open throughout construction. In response to a query, Bruder noted that it’s not a planned unit development (PUD), which prompted Higgins to say, “Thank god!”

But much of the meeting’s discussion centered on issues related to the historic district.

Challenges of the Historic District

Bruder reiterated that because the Historic District Commission had determined that 322 E. Kingsley and the Annex were “contributing” structures and could not be demolished, the only alternative for Zingerman’s was to request what’s called a “notice to proceed” from the HDC.

The criteria for issuance of such a notice, from the city code, are as follows:

8:416. Notice to proceed.
(1) Work within a historic district shall be permitted through the issuance of a notice to proceed by the commission if any of the following conditions prevail and if the proposed work can be demonstrated by a finding of the commission to be necessary to substantially improve or correct any of the following conditions:
(a) The resource constitutes a hazard to the safety of the public or to the structure’s occupants.
(b) The resource is a deterrent to a major improvement program that will be of substantial benefit to the community and the applicant proposing the work has obtained all necessary planning and zoning approvals, financing, and environmental clearances.
(c) Retaining the resource will cause undue financial hardship to the owner when a governmental action, an act of God, or other events beyond the owner’s control created the hardship, and all feasible alternatives to eliminate the financial hardship, which may include offering the resource for sale at its fair market value or moving the resource to a vacant site within the historic district, have been attempted and exhausted by the owner.
(d) Retaining the resource is not in the interest of the majority of the community.

Before Zingerman’s can make a request for the “notice to proceed,” their site plan must be approved by city council and their financing must be in place, among other things. Bruder said they’d held four working sessions with the HDC – the project as it stands is one that Zingerman’s is comfortable with, he said, and one that they think the HDC will be able to support.

At the June 21 public meeting, Detter had said he couldn’t imagine anyone on the HDC who’d be against the project – only an “extreme historic preservationist” wouldn’t want it to proceed, he said. He also said the Downtown Citizens Advisory Council – which he chairs – supports the project, and he felt it undoubtedly had the enthusiastic support of the entire community. But members of the Zingerman’s team indicated that they didn’t take approval for granted.

During Monday’s meeting of the brownfield plan review committee, Sandi Smith clarified that it was possible for the HDC to turn them down. “We really hope they don’t,” Bruder said, “But they could.”

Bruder pointed out that Zingerman’s is taking a big risk – if the HDC denies their request, their investment of time and money in the project so far will be for nothing.

Smith asked how much additional cost was added to the project due to preserving the Annex. About $500,000, Bruder said – or $550 per square foot. That doesn’t include all of the fees and expenses spent up until this point, he noted, related to working with the HDC and revising the site plan based on the rejection of Zingerman’s original plan, which included tearing down the Annex.

Smith asked whether it was fair to say that they were seeking tax credits because of those additional costs. Bruder responded by saying that the Zingerman’s team had recently met with the DDA’s operations committee, which had asked the question more bluntly: Will the project proceed if Zingerman’s doesn’t get the assistance it’s seeking? The project will go forward, Bruder said, but not necessarily as it’s now envisioned. Contrary to urban legend, he added, Zingerman’s does have finite resources. And if they get TIF reimbursement and state tax credits, it would allow them to do other things to enrich the project.

Strutz noted that at one point they’d talked about putting in a geothermal system, but when they found out they’d have to “put lipstick on the pig” – referring to the renovation of the Annex – that removed some options in other areas, he said.

Smith suggested that keeping the Annex was actually costing taxpayers. Kunselman then asked whether Zingerman’s planned to apply for historic preservation tax credits. They’re pursuing it, Bruder said, but they might not qualify. He noted that because they’re committed to that site, they realize that it adds to their costs.

Kunselman said he recalled the time before Zingerman’s was founded – he went to Community High School, and remembers the site before it became the well-known deli. The historic district helps give Zingerman’s its ambiance, he noted, saying he didn’t want the discussion to become one about how costly a historic district is.

Strutz said that after their staff, the most important thing to the business is its look and feel. They’ve spent a lot of time making sure the Annex won’t look out of place in the new campus, he said, but it’s been challenging.

Higgins asked what would happen to the business if the project weren’t approved. Bruder said they’ve never wanted to come to the city and threaten to move if they weren’t approved – Higgins assured him that she wasn’t getting that impression.

Strutz reported that at one of the working sessions, they’d been told by a member of the HDC that the greenest building was one that was already built, and that Zingerman’s should move to another location if it wanted to expand – the vacant commercial space at Liberty Lofts was suggested, he said.

The Chronicle has attended two working sessions between Zingerman’s and the HDC, and reported the exchange that Strutz referenced. From coverage of the Jan. 14, 2010 meeting:

Commissioners discussed how far the notion of “necessity” in the criteria for a notice to proceed extended – was it “necessary” that Zingerman’s undertake the expansion at that location?

Commissioner Ellen Ramsburgh wondered if the expansion was more than the site could take. She noted that the Zingerman’s Creamery and Bake House had moved to peripheral locations. “Do you need to be there?”

In her remarks, Ramsburgh was echoing sentiments expressed by then-commissioner Michael Bruner back in June 2008, when he had made the suggestion that Zingerman’s think of moving their operations. The specific location he had in mind was the Old West Side structure adjoining the Liberty Lofts development:

“Commissioner Bruner – [...] This may be less than what they need, but there stands today, a project that we reviewed and was approved, a development that includes a 20,000 square foot commercial retail area with parking that is begging to be occupied. [An apparent allusion to the Liberty Lofts greenhouse building.] As preservationists that want to encourage the success of economic projects in the city, perhaps Zingerman’s should consider moving their location as they have with their Creamery, which is at a satellite location, their Bakery which is at a satellite location, their Roadhouse that is a satellite location – this could be relocated as a satellite component at another location, nevertheless retaining this location as it is.”

Ken Clein [a Quinn Evans architect who's handling the Zingerman's project] responded to Ramsburgh at the January 2010 HDC working session by wondering if there were another historic district in another town where Zingerman’s could contemplate locating their operations. Ramsburgh: “That’s a threat!”

On Monday, Strutz said that at the end of the day, as a business decision they probably would have to move if the project isn’t approved. They’re losing business because they lack capacity now – you can see it when people are waiting in lines that wrap around the block, he said. Bruder added that there’s a breaking point, but they haven’t hit it yet.

Kunselman wondered if rejection of the plan would lead to a Glen Ann scenario. [He was referring to Glen Ann Place, a project that won approval from the planning commission and city council but was denied by the HDC. The situation ended in a lawsuit, settled in the summer of 2007 in a way that allowed the project to move ahead. But so far, nothing has yet been built on that vacant lot just north of Ann Street on the west side of Glen Avenue, where two houses previously stood.]

Strutz replied that he didn’t think they had the time to deal with it in that way.

Other Issues: Pro Forma Analysis

Matt Horning, the city’s treasurer, said that in the past they’ve looked at a project’s pro forma income statements with and without the brownfield TIF capture, and he wondered whether councilmembers wanted that kind of anaylsis on this project. Higgins suggested making it part of the committee’s recommendation to council.

With that, the committee voted unanimously to recommend approval of the brownfield plan, pending the pro forma analysis. “It’s moving forward!” Higgins said.

What’s Next?

One pending issue is related to the Ann Arbor Downtown Development Authority. The property straddles the boundary of the DDA, which also gets its funding, in part, from a TIF. The DDA is first in line to get new TIF revenues, which would amount to about $407,000 from that site over a 15-year period.

Rather than asking the DDA to forgo those revenues, Zingerman’s is asking that it identify other things of equivalent value to contribute to the project. They discussed possibilities with the DDA’s operations committee at a meeting last week.

Following Monday’s brownfield committee meeting, DDA executive director Susan Pollay told The Chronicle that the project is attractive to the DDA for several reasons, including the number of new jobs it will create and the amount of tourism dollars it attracts to the downtown, as a destination for visitors. The business has become an iconic identifier for the city, she said – and building a unique identity is one of the DDA’s strategies for creating a vibrant downtown.

On Tuesday, Strutz sent a letter to Pollay outlining some specific requests for the DDA board to consider. They include:

• $100,000 to reimburse Zingerman’s for costs associated with LEED certification.
• $160,000 for costs associated with on-site water detention.
• $50,000 to install ADA-compliant curb ramps at the Detroit and Kingsley intersection.
• $45,000 for sidewalk removal and replacement.
• $10,000 for wayfinding signs pointing to the deli, plus a roof sign on the addition that can be picked up by Google maps.
• Several other items with a cost to-be-determined, including parking spaces for contractors and a staging area, plus replacement or repair of brick pavers, curbs and water/sewer lines on Detroit Street between Kingsley and Catherine.

The letter states that support from the DDA would significantly improve their changes to receive Michigan Business Tax credits. Pollay expects the DDA board will consider and vote on a resolution of support for the Zingerman’s project at their July 7 board meeting.

City council is expected to consider the site plan and brownfield plan at their July 19 meeting. The county board of commissioners will likely vote on the brownfield plan at their Aug. 4 meeting – if approved, the brownfield plan would then be forwarded to the state.

Bruder said they hope to have the project considered by the historic district commission in September.

Assuming all approvals are in place, site work would begin in the late fall of 2010, with work on the addition starting in February of 2011. The goal is to complete the project by March of 2012, in time for the deli’s 30th anniversary celebration. They plan to keep the deli open during construction.

More information about the Zingerman’s project is available on a section of the deli’s website.