Archive for January 2010

The Two-Track Solution

January 28, 2010

To no one’s great surprise, the advisory committee for the Library Lot RFP decided to continue with the two conference center proposals.  (See the very complete account by the Ann Arbor Chronicle.)  This, in the face of some very pointed criticism of the finances of the two proposals by two staff members, who accurately pointed out that both proposals bore a great deal of risk and what assistant city attorney Kevin McDonald referred to as “contingencies”.  I’ll go into some detail on those in a future post, but meanwhile I want to point out that the makers of both of these proposals have made some effort to secure the “inside track”.

As today’s article on AnnArbor.com relates, and as we have repeatedly reported,  Valiant Partners LLC have been “working with” city officials for two years, much of it very privately.  It is clear that they were relying on a sense of acceptance and partnership to secure this deal, though they weren’t dropping any names after all the scrutiny they have been getting from us and other sources.  In their proposal, they included two letters from UM deans, though according to a post in A2Politico one of them is a former employer of Fritz Seyferth, a Valiant principal.

But they are not the only group that has connections.   As a second article from AnnArbor.com reports, the Acquest group also claims a close connection – with county administrator Bob Guenzel.  This might be expected in some ways; Guenzel has been very active in economic development issues.  He was long instrumental in the Washtenaw Development Council and was a founding board member of SPARK, which formed as the result of a merger between WDC and the SmartZone (the Ann Arbor-Ypsilanti LDFA).  He was also mentioned in the Ann Arbor News as a supporter of the concept of a conference center.

Acquest gets right into name-dropping in the second paragraph of their proposal, where they say, “based upon a recent meeting with Bob Guenzel, Washtenaw County Administrator, and subsequent discussions with Hank Baier and Jim Kosteva of the University of Michigan…” (Henry (Hank) Baier is the head of facilities at UM, and James (Jim) Kosteva is its director of community relations; presumably they would have been willing to make appointments but not commitments.)  At the interviews on January 20, I sat straight up when I heard David Ong, the president of Acquest Realty Advisors, say that “Bob Guenzel initiated the idea of county participation in a conference center”, and later heard him make reference to an authority that was a partnership between the county and city.  As a former county commissioner, I am very aware of the county’s budget problems, and there had been no whisper of such a plan coming from the sitting commissioners.

But when reached by email today (January 28, 2010), Guenzel had this to say:

“Dave Ong came to see me to give me a courtesy presentation of the Acquest proposal. He asked me whether the County might be willing to be part of an authority that operated a conference center. I said we might. Nothing else has been said or done about this. I made no promises. Of course, I do not have the authority to make any promises to the group. Anyway, there is nothing going on at the county on this issue.”

Density and the Conference Center

January 24, 2010

As the debate about what will happen on Top of the Parking continues, part of it is being conducted on a familiar Ann Arbor battleground.  After we were told earlier that the RFP Advisory Committee’s main concern was the financial benefit to the city, given the city’s big budget troubles, suddenly the old division between proponents of parks vs. “density” has emerged.  Indeed, when some members of the advisory committee say the word “park”, it is spat out like a bad word.   But a major thrust on defining the fate of the former Library Lot as being about density has come from a strange quarter: the Ann Arbor District Library board and its director, Josie Parker.

As we reviewed earlier, the new look at the Library Lot and its possible uses began with the AADL, which began in 2006 to do strategic planning toward a new library addition.  The DDA and Council both responded by beginning to plan for an underground parking structure, ostensibly to assist the AADL.  But only two months after the DDA approved a plan to build the structure, the AADL (in November 2008) voted to suspend their construction plans.  As the city has progressed toward making a decision about the use of the surface above the parking structure, the AADL has been the elephant in the room, often alluded to but rarely heard from.  But at the December 21 AADL board meeting, when the board engaged in a rather tentative discussion about the proposals on the table, board chair Rebecca Head suddenly came out with the classic “greenbelt link” density argument.  Her statement (paraphrased from my incomplete notes) was approximately this: an open space option was not a sustainable choice for the library lot.  A basic tenet of sustainability is that density should be in the city and open space should be in “appropriate” (her word) places, namely outside the city.  The greenbelt initiative was to place parks and greenbelt around the city, and infill should take place within it.

This theme was then repeated by Josie Parker at the interviews conducted by the RFP committee on January 19, when the Dahlmann open space proposal was being discussed.  She was asked her opinion about the proposal and stated that she believed the greenbelt came with the assumption that density is a priority in the city.

At the advisory committee’s January 21 meeting, where they were reviewing proposals in light of the interviews, DDA director Susan Pollay made an unexpectedly vehement statement opposing a park or open space on the lot and characterizing density as a source of  “energy” on behalf of the library.  Pollay, who has been working closely with Parker since the days of planning the library expansion, said that open space would not be used there and that it would “leach off” the library, that traffic was needed to support the library and bring energy to it.  The library, she said, is the true community gathering space and only the two hotel/conference center projects were “legitimate” projects that will support the library in its growth.  (My reaction was to wonder why the library needs a hotel to bring people to it – it is a draw in itself.)  Then outgoing community services administrator Jayne Miller chimed in with a riff on how the city had been trying for years to get downtown density.  She said that the greenbelt initiative gave the city a direction to increase density and they had been working on it for years with the A2D2 process and other efforts and why would we waste that when we had an opportunity to increase downtown density.

As I reviewed in an article first published in the Ann Arbor Observer in December 2005,  city voters approved a millage (popularly known as the Greenbelt millage) in 2003. The resolution is worth rereading in its entirety, as is the ballot language. See here. There is no mention anywhere of density or balancing growth within and without the city.  Instead, the resolution leads with this resounding whereas statement:

Whereas, The City of Ann Arbor has long been identified as desirable place (sic) to live, work and visit in part because of the presence of parks, open space and natural habitats, watercourses and farmland in and around the Ann Arbor community;

Note that part about “in and around the Ann Arbor community”?  Yet development proponents have ever since been claiming that in approving the greenbelt millage, voters also approved increased density within the city while open space belongs outside it.  This is what I have termed the “greenbelt link”.  (See my 2005 article for a lengthy discussion with quotes.)

Pollay is understandably frustrated, since the DDA’s mission is to promote downtown development and yet the only successful project (at least, one that has been built) it has managed so far on city property is Ashley Mews.  The Three-site Plan, which would have built a parking structure on the city lot at First and William and developed the Kline’s Lot and First and Washington public lots (this was reviewed relatively recently by the Ann Arbor Chronicle), was truncated so that the only completed plan was the City Apartments/Village Green project on the First and Washington lot, currently delayed by lack of financing.  A great deal of venom was expressed by DDA board members at the time against the Sierra Club and neighborhood advocates who succeeded in taking First and William off the table. (The Kline’s Lot project was not seen as feasible at all, given the market.)  The Downtown Residential Task Force, which published its report in 2004 (available here), had its main impetus from the DDA (and its then board chair was the chair of the task force).  The DRTF provided the meat of the argument for downtown density and its inception was at the same time as the greenbelt millage initiative.  Clearly in the minds of many in the development community, the two were joined, and Pollay has been one of the strongest proponents of this notion.  But that is not what the voters saw on the ballot, or in the campaign literature.  Even so, the usage of the term “density” has slipped into being synonymous with “development”, which is not accurate.  Most planning documents and studies (including the DRTF) mean “residential density” when they use the term – in other words, that more people live in the area, not that tall buildings sprout up.  If you accept the greenbelt link (which I emphatically don’t), you’d be asking where all the condominiums or apartments are, not looking for hotel and meeting rooms.

Of course, another thinly veiled reason to oppose open space next to the library is its history of difficulties with the troubled population of the old YMCA.  Before the old Y was emptied, some of the tenants with drug, alcohol, and other socially undesirable problems often hung around the entrance to the library. Liberty Plaza, the only open space downtown, has also had a history with the homeless or “vagrants”. Fears of a recurrence of such problems were repeatedly alluded to by RFP committee member Eric Mahler’s references to “security problems”.  In response to a question from Stephen Rapundalo at the interviews, about “less desirable elements”,  Parker asserted that the space might not be well maintained: “it is our experience that people do not clean up after themselves – you have to monitor them”.

Also at issue are the economics of a park or open space vs. a development.  It was frequently mentioned at advisory committee meetings that parks take operational (maintenance) money that the city doesn’t have.  It has been assumed that the development proposals will bring a positive economic benefit (but more about that in a future post).  Miller, in a rather startling outburst, said at the last meeting that she wanted the ice rink removed even from the Valiant proposal.  “You don’t make money off effing free skating!”  (Really, that is what I heard.)

Still, in the end the open space vs. density argument is really about two competing visions of what kind of city Ann Arbor will be in the future.  Is it to be a gracious community where quality of life is defined by community festivals in the open air?  Or a bustling center of activity with visitors bringing wealth to enlarge business opportunities?  The dichotomy is much more nuanced than that, obviously.  But at heart the competing visions are what add passion to the debate.

UPDATE: The Ann Arbor Chronicle has now published an account of the Jan. 21 advisory committee meeting that quotes a number of the discussions.

The Old Y, the Conference Center, and the Inside Track

January 19, 2010

As we discussed some months ago, there are intriguing links between the failure of the plan to replace housing at the old Y site and the current proposals to have a conference center across the street at the Library Lot.  Our earlier article recounted some of the history of William Street Station, the development proposed by  HDC Construction Company  in response to the City’s RFP to replace the supportive housing lost when the old Y was closed.  The project was voted down by council on November 5, 2007, in an action that a contemporary account said left the developer “stunned”.  Now HDC is suing the city.  The lawsuit reminds us that the developer had by then obtained $18.5 million in low-income housing tax credits from MSHDA (the state housing authority) and a $7.5 million MEGA (Brownfield) grant.  Those were both lost with the cancellation of the project.  Could it be that what killed the project was its last iteration, in which HDC proposed to build a hotel and conference center as the money-making part of the project?

One problem that the developers faced was that the main source of subsidy for the affordable housing, the low-income tax credits, are only effective for 15 years.  But the council wanted the supportive housing in perpetuity.  Another problem was that through 2007, the leading edge of the Michigan recession and general decline in housing demand made the original plan’s viability questionable.  (It would have combined market-rate housing with the supportive housing tower.)  So HDC came up with a revised plan that would have combined a hotel-conference center, the housing, and the bus terminal (don’t forget that this was also a joint project with AATA).  Only weeks before its death, a revised site plan for the project was approved by the Planning Commission.

Could it be that several people on the inside track began to look at this concept and conclude that it might be better without the distressed population of the supportive housing tower and the bus station? After all, a “world-class” facility is…classy. We don’t have a record of the conversations going on behind closed doors in late October 2007, but they can be imagined. Even then there were occasional news stories about efforts to find other locations for the housing. One email conversation between CM Leigh Greden and CM Margie Teall is available by virtue of the citizen FOIA project.   The exchange took place on November 5, 2007. (Teall and Greden apparently voted to extend HDC’s option, though mayor John Hieftje voted against it.)  One interesting statement is, “John H wants the units outside downtown, scattered. If HHSAB comes up with a statement that the units don’t need to be downtown, it frees up strings on the Y site.” The significant thing about this observation is that it was made on the same night that the William Street Station project was killed.

Two players who may have known more about what was being said than even Greden and Teall were Jesse Bernstein, the former president and CEO of the Ann Arbor Chamber of Commerce, and Bob Guenzel, the county administrator.  Consider the timeline:

October 2007:  The site plan for the William Street Station hotel and conference center is approved at Planning Commission.

November 2007:  The project is killed.

December 2007:  Bernstein and Guenzel have coffee at the Cafe Verde and decide a conference center is a great idea (as reported in the Ann Arbor News some months later).

April 2008:  Bernstein organizes a forum to discuss a conference center and Roger Fraser is quoted as saying he wouldn’t mind seeing a conference center over the Library Lot.  But even as the first discussions are breaking in the News, an email discussion with DDA director Susan Pollay links Bernstein with two later members of the Valiant partnership (they of the Secret Plan).  Fritz Seyferth and Bruce Zenkel have already, as of April 9, 2008, had one group of prospective investors tour Ann Arbor and are now working with a second.

By December 2008, as reported by the Ann Arbor Chronicle, the council is hearing about other possible sites to locate the 100 units of supportive housing.  Two of them belong to Washtenaw County.  At this time, I heard anecdotal accounts that Guenzel was meeting with commissioners to win acceptance for the county making one of them available (it never came to pass).

Thanks to another story (January 18, 2010)  in the Chronicle, we now learn that Fraser had an early version of the Secret Plan at a council Budget and Labor Committee meeting and was told by the councilmembers there to “put it on the shelf”.  But instead, he presented it at the January 2009 council retreat.

The January 18 Chronicle account elicited a remarkable addition from CM Sabra Briere (see comment #7), with an account of a December 2009 encounter with Bernstein.  He had asked to meet with her privately, apparently to complain about the ongoing RFP process.  She related,

“Bernstein said he, Fraser and Hieftje had met with people from Valiant. The Valiant people had asked what they could do for the City. The ‘vision’ that had emerged from this meeting was that the City wanted a conference center … Bernstein said he felt betrayed. He said that Valiant’s proposal for a conference center was a consensus project, and that it was not fair that Valiant should have to jump through all of these hoops.”

All this makes it clear that there was an inside track and that the participants had hoped that the Valiant proposal would be accepted without too much fuss.  Since last summer, the process has instead been becoming more and more open to discussion.  It is a test now of the current council (many of whom were not involved with the inside story) as to whether the Valiant proposal will in fact be accepted despite the considerable risk it would involve to the city.  (Even the Secret Plan says that most conference centers have to be subsidized.)  It will probably always be a mystery how much this concept had to do with the failure of the William Street Station project. But maybe we’ll now be running on a fully public and accountable track.  Putting everything about the RFP on the city website is a great start, and the RFP Advisory Committee has made meetings open to the public and even a chance for public questions at the interviews.  What a nice thought for a new year.

UPDATE: AnnArbor.com reports that HDC’s lawsuit was denied in Federal Court.

SECOND UPDATE:  Today (March 30, 2012) AnnArbor.com reports that HDC’s appeal also failed and the City of Ann Arbor declares a final victory.