Downtown Merchant Associations Say DDA Recommendation “Threatens” Merchants’ “Very Existence”

by Patricia Lesko

In a meeting held at lunch-time on Wednesday Mar. 1, over the objections of both the Main Street and State Street Area Association member business owners, the Downtown Development Authority Board approved the leasing of 361 parking spaces in public-owned parking structures for 50 years to Chicago-based developer Core Spaces. Ann Arbor has a total of 8,200 public parking spaces. Letters in which the merchant associations say their members object to the plan to lease 361 parking spaces in public-owned parking structures to Core Spaces were sent to the DDA Board prior to that Board’s vote in favor of the Core Spaces’s proposal, as well as to City Council. The Main Street and State Street Area Associations represent the interests of 300 of the approximately 1,300 businesses in the DDA’s 2-mile established zone. Current DDA Board members are Robert Guenzel, Marie Klopf, Howard Lazarus,  Sava Lelcaj-Farah, Joan Lowenstein, Darren McKinnon, Al McWilliams, John Mouat, Rishi Narayan, Keith Orr, John Splitt and Phil Weiss.

Core Spaces has been in back channel discussions since 2012 with city officials to develop the Library Lot parcel located on Fifth Ave. next to the main library and across from the Blake Transit Center and the former spot of the Ann Arbor YMCA which was torn down and 100 spaces of low-income housing lost. The Core Spaces proposed building would include 357 apartments and 131 hotel rooms, office and retail space as well as an outdoor plaza.

The Mar. 1 resolution approved by the DDA Board sets out the number of parking spaces in public-owned structures the DDA recommended to Council be leased to Core Spaces for the next five decades:

196 – 24-hour equivalent parking permits will be leased in the City-owned Library Lane Structure located beneath the proposed development. The 196 permits are calculated as 196 permits for 24 hours per day for each year. Therefore, if Core Spaces elects to designate the use of off-peak permits (currently 15 hours), the remaining 9 hours will be available for additional permits.

85 – 24-hour equivalent parking permits will be leased at the City-owned Fourth and William Structure. (All parking permits in the Fourth and William Structure may be replaced by the City with permits in another structure in the same parking district if the Fourth and William Parking Structure is not in use.)

80 off-peak parking permits will be leased at the City-owned Fourth and William Structure.

Ann Arbor’s DDA was founded under the auspices of the state’s DDA statute passed in 1975. That statute enabled the creation of such tax-increment financed entities to:

“provide for the establishment of a downtown development authority; to prescribe its powers and duties; to correct and prevent deterioration in business districts; to encourage historic preservation; to authorize the acquisition and disposal of interests in real and personal property; to authorize the creation and implementation of development plans in the districts; to promote the economic growth of the districts; to create a board; to prescribe its powers and duties; to authorize the levy and collection of taxes; to authorize the issuance of bonds and other evidences of indebtedness; to authorize the use of tax increment financing; to reimburse downtown development authorities for certain losses of tax increment revenues; and to prescribe the powers and duties of certain state officials.”

The DDA Board’s Mar. 1 vote infuriated downtown merchants.

However, during the DDA’s public discussion of the Core Spaces’s proposal prior to the Board’s vote, the two letters of objection sent by the merchant associations were not discussed, nor were they included in the DDA’s meeting packet available to the public on the group’s website. DDA Board meetings permit public comments from four individuals who may speak for four minutes each. Main Street Area Association’s Maura Thompson attended the Mar. 1 meeting. Thompson, rather than speaking about her members’ objections to the resolution to lease parking spaces to Core Spaces, instead, “stated that she wanted to see data showing longer hours of enforcement at on street meters helps with customer turn-over.”

The business owners listed on the letterhead of the Main Street Area Association include Hooper Hathaway, the law firm which employs Mayor Chris Taylor, as well as Q&M, the marketing company owned by DDA Board member Al McWilliams. State Street Area Association Board members include local barber Bob Dascola, who ran for City Council in 2014, Jim Knight, the owner of Knight’s restaurant on Liberty, as well as John Splitt, owner of Gold Bond Cleaners and a current DDA Board member.

Downtown merchants aren’t the only people in Ann Arbor who object to the Core Spaces project as proposed. In fact, the letters from the merchant associations to the DDA Board and Council were shared with members of a group of Ann Arbor residents who have been pushing mayor and council members to put the disposition of the Library Lot parcel up to a vote of the electorate.

Will Hathaway is a member of the Library Green Conservancy, a group that wants to use a part of the library lot as a public open space. Hathaway argues that the proposed high-rise is “mired with problems,” the first of which is giving away public parking.

According to Hathaway, of the more than 700 underground parking spaces of the Library Lot, Core Spaces proposes to purchase or lease 196 of the spaces. However, he said 196 is not a sufficient number to satisfy all inhabitants of the high-rise, so Core Spaces is asking for another 85 parking spaces and 80 off-peak permits in the nearby parking lot on 4th Street and Williams Avenue. Hathaway argued even that is too little and would create a massive shortage of parking spots.

Downtown merchants agree and said as much in their letters.

The Main Street Area letter, sent by Tom Murray, President of the MSAA is also signed by Maura Thompson the MSAA’s long-time executive director: “The MSAA is all for growing our downtown all the while maintaining its small town charm. The Core Spaces proposed ‘structure for a parking agreement’ as outlined in their September 26, 2016, letter, to the Downtown Development Authority will have a detrimental economic effect on the many businesses and residents that call the downtown their home. We support substantial growth but not at the expense of our very existence.”

Likewise, in January 2017, Frances Todoro the Board President of the State Street Area Association on behalf of that organization’s member business owners, sent a similarly-worded letter to mayor and council.

The DDA Board members’ vote in favor of the lease paves the way for a development which city staff project could bring in as much as $1 million in additional property tax revenue. The plan now requires eight votes of Council to move forward. The additional property tax money, 1/380th of Ann Arbor’s annual total projected budget in 2016, and 1/99th of its total General Fund in 2016, has some on Council seeing more money for police and other basic services. The project, initially a 12-story high rise aimed at student housing (Core Spaces focuses on “focused on acquiring, developing, and managing the best real estate in core locations within the educational sector,” according to the company’s website) has morphed over the past four years into a less student-housing oriented project.

Tax revenue isn’t the only reason Council members are giving for their support of the Core Spaces proposal.

Zach Ackerman (D-Ward 3) and Kirk Westphal (D-Ward 2) have repeatedly pointed to the fact that 42 of the housing units in Core Spaces’s will be so-called “workforce housing,” which will house individuals making $45,000 to $60,000 a year, 80 to 100 percent of Ann Arbor’s median income. Moreover the city will appropriate half of the $10 million revenue from the high-rise to the Affordable Housing Fund. Workforce housing, though it is generally meant to mean affordable housing, under the terms of the city’s Affordable Housing Fund, qualifies as neither affordable or low-income housing.

The Affordable Housing Fund was established in 1989 by City Council under Republican Mayor Ingrid Sheldon. According to the Fund’s establishing language: “The Ann Arbor Affordable Housing Fund is established for the promotion, retention and creation of long term affordable housing for households with incomes less than 60% of the City’s median income. Further, the Fund is established to improve housing conditions for City of Ann Arbor residents, with priority given to those whose income is at or below 30% of the median household income.”

Furthermore, the promised workforce housing will not replace the 100 units of low-income housing lost in 2008 when the Fifth Ave. YMCA was demolished. Finally, workforce housing doesn’t address what county economic development officials concluded in a 2015 study are the root causes of segregation and socio-economic challenges facing Ann Arbor and county residents.

The Jan. 2015 report published by the Washtenaw County Office of Community and Economic Development states, “Right now, the market is doing an adequate job of addressing significant portions of the rental housing needs of working families. But families with poor credit and work histories, disabilities, or other challenges are not being served by the market, and there is limited public and nonprofit sector capacity to handle the balance, irrespective of where housing might be found or developed.”

Council will discuss and vote on the DDA’s recommendation concerning the lease of 316 parking spaces in public-owned garages to Core Spaces.