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Posted on Tue, May 24, 2011 : 5:59 a.m.

Ann Arbor city budget: Kunselman proposes plan to downsize DDA, take control of downtown parking

By Ryan J. Stanton

Ann Arbor City Council Member Stephen Kunselman says he's "extremely disappointed" it has taken more than a year of haggling between the city and the Downtown Development Authority to come to terms on a new parking agreement.

Even with a tentative deal in the works, he's still not happy. That's because the agreement awaiting City Council approval includes a broad transfer of duties from the city to the DDA — giving the DDA sole discretion to set downtown parking rates and meter enforcement hours — while still leaving the city pondering deep cuts to public safety services.

"I have no confidence in the DDA board," Kunselman said after Monday's City Council meeting. "Their obstinate demands for authority over setting rates and hours illustrates to me they've just become addicted and dependent upon parking revenues for their own purposes, and they're not necessarily interested in the public health, safety and welfare of our community."


Ann Arbor City Council Member Stephen Kunselman, shown here in a file photo, is proposing a plan to take control of the city's parking system away from the DDA.

Ryan Stanton |

Kunselman, D-3rd Ward, is proposing the City Council vote to take control of the city's downtown parking system from the DDA and place it back in the city's hands. He's offering an amendment to the 2011-12 budget to make that happen effective July 1.

"I don't know how it will fare on the council table, but I think it's important that we illustrate to the public that parking is under the jurisdiction of the City Council and that's where it rightfully belongs," he said of his proposal, which he believes will give the city the ability to tap into parking system revenues to stave off cuts to public safety.

Council members put off making any decisions on the city's 2011-12 budget Monday night, quickly adjourning their meeting without discussion.

Mayor John Hieftje offered brief remarks, saying final details of a new parking agreement with the DDA still are being worked out and it would be imprudent for the council to act on the budget just yet. The council will continue deliberations at 7 p.m. next Tuesday.

Under a tentative deal approved by the DDA board last Friday, the DDA could potentially give the city 17 percent of revenue from the parking system through June 2033. That amounts to nearly $2.7 million next year, and it comes with the stipulation that the city must act as a financial backstop for the DDA if the authority's fund balance gets too low.

Hieftje and Council Member Christopher Taylor, D-3rd Ward, are working on a resolution to clarify when and how the DDA fund balance would be backstopped.

The DDA has managed the city's off-street public parking, including downtown parking garages, since 1992, and on-street metered parking since 2002. In all, the parking system has about 7,100 spaces, which are expected to bring in more than $16 million next year.

"The budget amendment to defund parking from the DDA basically would bring back parking operations under the purview of the city — under the management of our public services entity — where it had historically been before," Kunselman said.

Until now, the DDA has operated with four employees, but that's up to five with the addition of a planning and research specialist position in next year's budget. Kunselman, who believes there are duplications of services between the city and DDA, proposes eliminating the new position and immediately reducing the DDA to two employees, and then using the $210,644 in savings to re-hire two "beat cops" to patrol downtown Ann Arbor on foot.

The city administrator's budget proposes the elimination of 25 positions in the police department and 12 positions in the fire department over the next two years. Hieftje is working on a plan to avoid a small handful of those job cuts, but Kunselman thinks that's not enough — he wants to find a way for the city to maintain current police and fire staffing levels.

"We cannot cut anymore," Kunselman said. "We have to find ways to maintain our public services at the levels that we are at right now. I do not feel comfortable closing the fire station down the street from me. I do not feel comfortable laying off additional firemen or policemen."

DDA Chairwoman Joan Lowenstein attended Monday's council meeting and said afterward she doesn't think Kunselman has his calculations correct.


Joan Lowenstein

"The city would get less money under that plan than what it is proposed to get right now," she said, adding Kunselman's proposal doesn't take into account the fact that the city would be assuming responsibility for not only maintenance of the parking garages, but also debt obligations that are being covered by DDA tax-increment financing revenues.

"The only way the city would make money is if they did absolutely no maintenance on the parking system, and that's the problem with that theory," Lowenstein said.

Hieftje, who serves on the DDA's governing board and appoints its members, said it wouldn't be possible for the City Council to unilaterally take control of the parking system because the city has an existing parking agreement with the DDA that runs through 2015. He acknowledged the idea has come up in DDA discussions several times.

"They've talked about what if they just handed over the parking contract, and each time that didn't get very far," he said. "I think the DDA believes they are managing the parking system very well. And if you look at the numbers, the revenues that would come to the city are no more if it was ours or if it was theirs, because we're extracting about the maximum amount."

Lowenstein noted it was only after the DDA started managing the city's parking system in 1992 that the DDA started putting money into maintenance of the system. Before then, she said, the city was just using parking as a "cash cow" and parking garages fell into disrepair.

Kunselman noted he's not interested in dissolving the DDA. He said the DDA still can do a lot of good in the downtown with the nearly $4 million a year in TIF revenue it collects, but he doesn't think revenue from the parking system should be passing through the DDA's hands.

"Now is the time for change," he said. "We have drastic issues to deal with on our city budget. And as was pointed out by our prior city administrator, every department in the city has been downsized except for the DDA. And in this budget, we're even proposing to expand the DDA. That's not OK with me, and I don't believe it's OK with the residents of Ann Arbor."

Hieftje used Monday night's meeting as a platform to point out that, while the city may have a large amount of money in cash reserves, it's the opinion of the city attorney's office that — except for the general fund reserve of $10.7 million — the city can't tap any of the other funds to augment the city's general fund budget (download the memo from the city attorney's office).

Ryan J. Stanton covers government and politics for Reach him at or 734-623-2529. You also can follow him on Twitter or subscribe to's e-mail newsletters.


Bertha Venation

Thu, Jun 2, 2011 : 4:01 p.m.

Go away DDA!


Thu, May 26, 2011 : 2:28 a.m.

What this is in reality -- a POWER GRAB by Kunselman. The DDA is profitable and is accountable and private-- what they have done (the DDA) is keep the council in check. The DDA has made the city council more responsible in its budgeting and this is what is upsetting Kunselman. the far left in our town have become far too militant and this is just another example of outrageous thinking on the part of our elected officials. The city keeps attempting to confiscate more money from the DDA and the resistance by the DDA has upset Kunselman. Maybe the city should spend less and see what occurs. The city has overspent and over promised on the contractual agreements with city unions -- this is now causing some very real effects on our town. This liberal thought process that got us into this mess needs to stop and wee need to find a better way than just spending more money. Lets leave the DDA alone -- it is successful -- unlike liberalism.


Wed, May 25, 2011 : 4:22 a.m.

I did not notice anywhere that Kunselman is proposing that the contract with Republic Parking must be terminated. I only interpret that the management would shift from the DDA back to city operations. I do believe that parking facilities are maintained and operated more efficiently than when done so by city employees. Let the city manage the contract directly with the private contractor until 2015 and then determine if it should be outsourced or direct. I suppose the city could create a specially restricted fund dedicated to parking maintenance, seems like the majority of the funds are managed that way anyhow. Don't need a separate authority for any of the other shell accounts.


Tue, May 24, 2011 : 10:20 p.m.

I could look this up, but I'm sure someone reading this thread can answer it for me: what is the DDA, legally? For-profit? Non-profit? Incorporated under which state's laws, if it's a for-profit?

Vivienne Armentrout

Tue, May 24, 2011 : 11:06 p.m.

It is a public body, an authority, under P.A. 197 of 1975.

Jimmy D

Tue, May 24, 2011 : 8:41 p.m.

I agree that the City should be running the parking system. But wasn't the DDA created back in the 90's after the City raided every penny from the parking maintenance budget instead of operating the system? Weren't some of the structures condemed after only a portion of their lifespan due to a lack of maintenance? Wasn't their a lack of parking downtown contributing to empty store fronts? So pick your poison, go with a semi-independent agency that might get uppity or send it all back to the Council who may waste the funds on pet policies instead of parking. Maybe I'm off base, but I'm pretty sure that is how we got here.

Vivienne Armentrout

Tue, May 24, 2011 : 10:14 p.m.

The DDA was created in 1982 and it had nothing to do with parking (unless you count Tally Hall). The city asked the DDA to take over the parking utility in the 1990s because structures were crumbling. And yes, they have done an excellent job with the utility. But that was not the reason for their inception.

Steve Hendel

Tue, May 24, 2011 : 9:12 p.m.

I was there, and you are essentially correct. We would still need an advisory body to make sure that doesn't happen again, but this time one with heavily restricted powers.


Tue, May 24, 2011 : 8:17 p.m.

Here's a useful survey of DDAs in West Michigan. They're a real mixed bag: anyone who visits downtown Grand Rapids can see the positive results of a well-run one. But other communities are thinking of eliminating theirs, and councilwoman Lowenstein's rude dismissal of Kunselman's proposal has the panicked feel of someone whose cozy interests are being threatened. Some have built individual parking projects, but few run their parking systems. My initial feeling is that keeping but downsizing the DDA and putting the parking system back under the control of voters is a good idea—the cost gap between the city and the DDA's private contractor would have narrowed due to recent city employee union concessions. <a href="" rel='nofollow'></a>


Tue, May 24, 2011 : 8:35 p.m.

Pssst @sliverwings - Lowenstein is not a council person, she is the DDA Chairwoman. Though I can't speak for her, her &quot;rude&quot; dismissal appears to be because she doesn't feel he gathered/knows/is sharing all the facts. I'm betting that she is correct in that based on his track record.


Tue, May 24, 2011 : 7:32 p.m.

Kunsleman is extremely good at championing causes that he thinks people will want to rally behind without providing real information about the impact of his position. Perhaps this is because he hasn't done the research and isn't actually interested in the fallout as long as people perceive him as the 'guy asking the tough questions'. I'm still unimpressed, sorry he's back on council, and looking forward to election time. Hope there is a good candidate running against him, because they have my vote.


Tue, May 24, 2011 : 7:15 p.m.

Has anyone ever asked and gotten an answer as to why Ann Arbor does not do their own billing for parking tickets and instead outsources to a company in New York? The cost of a ticket is outrageous as it is with very little is staying in Ann Arbor. Is there someone that can put into plain English how much of the revenue from tickets does the city actually receive and how much of it goes to the NY company?


Tue, May 24, 2011 : 6:34 p.m.

The DDA was willing to take on the horrible job of repairing and rebuilding the crumbling parking structures back in the early 1990s, in return for receiving the structure revenue. That was fair, because the DDA took on long-term debt to finance the work. They later were willing to take on the whole issue of parking and make it a cohesive system, coordinating the rate structure for all its components: structures, lots and meters. It has worked extremely well, because the DDA can focus on a limited geographic area. Other City staff have to deal with the whole city, and sometimes beyond. It would, in my opinion, be both greedy and foolish to eviscerate this excellent system.


Tue, May 24, 2011 : 5:46 p.m.

About time! I have been watching this for some years and finding ever more interesting that so few question the DDA. They are way over board in their demands and power. I hope that the mayor and council can stick together on this important issue. DDA president and board are way out of line and have been for some time. Next...they run the mayors office... or are they already?


Tue, May 24, 2011 : 5:14 p.m.

Does anyone have any idea how or if the DDA and The &quot;BIZ&quot; work together on projects?


Tue, May 24, 2011 : 4:44 p.m.

I love it when Hizzoner refers to the DDA in the third person and acts as if he has nothing whatsoever to do with it. I wonder if he thinks he is fooling anyone with that act?

Stephen Lange Ranzini

Tue, May 24, 2011 : 3:54 p.m.

If it is true that $243 million of the city's cash and short term investments are locked up in various separate shell accounts and not available as needed, to put that into perspective, total annual property tax collections are just $82.06 million (see CAFR page 14). Even taking out the total cost of the multi-year water and sewer system upgrade in progress, which is $82 million (see page 4 (WWTP)), that would still leave two years of property taxes lying idle in city accounts. This inefficient fiscal system causes our current elected political leaders to assert that taxes must go up or services will go down despite drowning in cash. Conversely, if we drained the buckets we could have a one year property tax holiday and still have a hefty rainy day fund well above the Michigan Municipal League's recommended level for a city of our size of 15% of annual revenues. Drain the buckets!


Tue, May 24, 2011 : 5:16 p.m.

Well, ya know that money is &quot;untouchable&quot; because of council resolutions, most likely...oh wait, they can do another resolution to unlock the moola...what a concept! You are most likely not gonna make too many friends at Ugly I mean City Hall...go for it Stephen!

Stephen Lange Ranzini

Tue, May 24, 2011 : 2:59 p.m.

According to the city's audit report (CAFR) for 2010, the city government holds a total of $254 million of cash and short term investments (see page 11). Who designed this Rube Goldberg style system so that all but $10.7 million of that money is locked away in separate shell accounts (buckets) and not available to be shifted around as circumstances change and needs come up? I note that the CAFR report has a footnote 17 on page 81 which purports to list ALL externally restricted funds held by the city. That total is just $68.718 million: Highways and streets $40.584 million Culture and recreation $23.093 million All other $5,041 million The footnote reads: "A portion of the city's net assets are presented as restricted, due to external requirements either by the source of the funding (i.e., state or federal funding) or by the nature of the funding (i.e. millage funding) to indicate they are not available to meet the City's ongoing needs. The purpose of these restrictions is evident from the Statement of Net Assets [page 21] except for the following:" The list and amounts summarized above then follows. It is important to note that the footnote clearly implies that ALL OTHER RESTRICTIONS on the money are not imposed by the source of the funds or by the legal text of a millage, but by the POLICIES of the city council or terms of the City Charter. Policies of city council can change if they have the will. For example, Councilman Steve Kunselman's proposal to bring the parking system back into the general fund. Also, the City Charter can change if we the citizens find it inconvenient. The only items noted on page 21 are the funds in the Ann Arbor Housing Commission, Smart Zone and the Downtown Development Authority, whose total cash and short term investments are listed on page 21 as just $13.6 million.


Tue, May 24, 2011 : 2:17 p.m.

I never see anybody running for the office of Downtown Development Agency during the previous elections? Are these people appointed by the city council to make the &quot;HARD&quot; decisions so that the city council members don't get dirty? So who really is in charge?


Tue, May 24, 2011 : 2:08 p.m.

How many cities the size of Ann Arbor or larger have the equivalent of our DDA? How well do the fare with their entity?


Tue, May 24, 2011 : 1:41 p.m.

Absolutely! I have never been able to understand what earthly use the DDA is to a resident, except for the somewhat tenuous &quot;trickle-down&quot; theory that if good things happen for downtown businesses, it will somehow be of value to people in the neighborhoods. And if the assumption is that Council isn't capable of representing downtown businesses itself or for some reason has to outsource that representation, well, that's a sad admission.

Tony Livingston

Tue, May 24, 2011 : 1:15 p.m.

The city is looking anywhere it can to grab money. Except, that is, it's own house. The most obvious drain on dollars is the city's own policy of granting retirement pension payments to employees in their prime working years. At age 50, all they have to do is secure a job elsewhere and retire from the city with 70% pay plus benefits. Voila! Huge increase in income for the employee and a huge drain on city coffers while they pay someone not to work at the same time they pay somone to work. Waiting until age 62 to allow payments to begin would save the city millions. But no. We don't want to look at this. It might ruffle feathers when people don't get their golden parachute.


Tue, May 24, 2011 : 10:10 p.m.

So we can assume, Tony, that you're not in line to receive any of these benefits?

Steve Hendel

Tue, May 24, 2011 : 7:52 p.m.

I am a City retiree who retired at age 55.5 after 30 years; I do not receive 70% of my pay, and the only benefit I received (and a nice one) was medical coverage. I could have retired at 50 with a smaller pension , or waited until 62 and received a larger one. I also contributed 5% of my pay for all those 30 years. So it is not QUITE the doodle you make it out to be. PS: I helped spend your taxes in my job


Tue, May 24, 2011 : 1:07 p.m.

Another meeting adjourned and still no budget agreement and this time &quot;without discussion&quot;? What is going on here? If this council can't even complete a new medical marijuana ordinance how can we expect them to complete a new budget. It is now apparent that without a city adminstrator in place, there is absolutely no leadership or direction occuring within the city governement. Just a lot of finger pointing and putting off the hard decisions as usual. Raiding the various piggy banks will not solve the long term &quot;structural&quot; budget deficit.


Tue, May 24, 2011 : 12:28 p.m.

Lowenstein and Heifje are worried that their own little piggy bank is about to get raided. For 16 million a year I think we can maintain the parking spaces. Heiftjes comments about not transferring money from one bucket to the next is baloney. They do it all the time (i.e. Huge water fountain). Use interdepartment billing. They do this with ever other city service( IT charges $2500 per email address, city garage charges $1000 per oil change). So why not charge the water department $1 million for police and fire services. Boom! Problem solved.


Tue, May 24, 2011 : 5:24 p.m.

Thanks for bringing up that interdepartmental billing. I've been wondering about that myself for a while now.

Vivienne Armentrout

Tue, May 24, 2011 : 12:23 p.m.

While I agree that the DDA has become an oversize player in city policy and planning, the parking system is the wrong place to cut. The city's parking system has been well managed by the DDA (apart from the expansionist adventures noted below) and the city would take on many expenses and responsibilities that would undercut any monetary gains. Unfortunately, the DDA has exercised its involvement in the parking system in order to support increased development in the downtown. This was evidently originated within the DDA rather than within Council, though Council has been complicit in the projects, notably the huge underground parking garage on 5th and also the subsidized parking for Village Green (that project will have the DDA buy the parking garage for that development on First and Washington, meaning more indebtedness). This has presented the city with a very large bill and it is unclear to me how it would pay for them without access to the DDA TIF revenues. The 5th avenue &quot;Library Lot&quot; parking was supposed to be paid for from parking revenues but is already being paid by TIF. I don't see how the DDA could function without 3 employees at a minimum, and I also don't see where the Council has the authority to decide on staffing issues. This is an authority with its own board.


Tue, May 24, 2011 : 12:18 p.m.

Indeed, the DDA needs to be closed down -- and all that pertains to the parking issue needs to return to the city -- funds and what it takes to keep the parking lots/spaces intact. I, too, applaud Mr. Kunselman on his recommend to do the above. An advisory board for the city could offer insight as to various needs, i.e. beaufication of downtown, etc. We should not have to pay rental for a huge office area, and the salaries of folks to do the work that should be done in &quot;City Hall&quot; -- government all the way around is just getting way too big and not very responsible with citizens hard earned dollars.

rusty shackelford

Tue, May 24, 2011 : 11:57 a.m.

Whatever the original intentions of the arrangement, DDA's ever-growing authority has become one of the main ways council members duck issues that might cause controversy. At the same time, the unelected elite that runs the board has grabbed more and more power, and works only in their own interest (and is there a DDA board member who doesn't have massive conflicts of interest?), not for the town as a whole. This &quot;shadow government&quot;--that sounds more nefarious than it's intended--needs to end. These kind of decisions need to be made by elected representatives who are, at least in theory, accountable to us. I applaud Kunselman and urge his colleagues to take heed: the people of Ann Arbor are sick of having too many of the town's decisions made by unelected business elites.


Tue, May 24, 2011 : 10:13 p.m.

Coudn't agree more. As I said elsewhere, I'm not sure that the Council outsourcing any of its oversight, accounts receivable or payable, or authority in general is really all that good an idea.

Wolf's Bane

Tue, May 24, 2011 : 11:45 a.m.

Of course J. Lowenstein will say anything to preserve the DDA, but the simple fact remains that in these economic times the DDA needs to be self supporting or downsized. I am in total favor of Ann Arbor City Council Member Stephen Kunselman's proposed plan and look forward to seeing Mayor Hieftje and Council Member Christopher Taylor, D-3rd Ward, resolution.


Tue, May 24, 2011 : 11:41 a.m.

Can someone look into the DDA's location in the Fifth Avenue Building and why they just signed a new contract to stay there? Who pays the rent, and why do they need so much space?

Paula Gardner

Wed, May 25, 2011 : 10:24 a.m.

Here's an article about the lease renewal: <a href=""></a>

Joan Lowenstein

Tue, May 24, 2011 : 11:30 a.m.

The DDA has only 4 employees, yet manages the parking system with more than $15 million dollars in revenues, manages the $4 million TIF, is constructing a new parking structure with more than $50 million in funds, works to promote economic development and planning in the downtown, and provides grants to strengthen existing businesses. Now is not the time to &quot;downsize&quot; economic development. The question of whether there should be more police in the downtown is one for the police chief. I don't notice whether Mr. Kunselman has consulted him. In addition, the City would actually have to hire more employees to manage the parking system, so the benefit of breaking the existing parking contract, if possible, would be negligible.


Tue, May 24, 2011 : 11:35 p.m.

Joan: I am confused about TIF and went to the State webpage (<a href=",1607,7-238-43876---F,00.html)" rel='nofollow'>,1607,7-238-43876---F,00.html)</a> but still find the whole thing quite baffling. Is the district under the jurisdiction of the DDA paying extra mills in property tax?


Tue, May 24, 2011 : 5:17 p.m.

I would've spit out my coffee too, if I drank it! The police chief is a politician. I have seen him a couple of times now in action, &quot;working it&quot; at council meetings. I see possible flaws in Kunselman's plan, but I also see potential. And common sense - what is Ann Arbor, if not the public?? That is where city council's priorities should be. Kunselman's priorities are in the right place. And what are the salaries paid to all these city attorneys who insist that there is no money that can be added to the General Fund to pay for our safety services? Seriously, I feel like things are so out of whack in my city right now. AA has always struggled against falling prey to exclusive, overly affluent, elitism, but I see this ugly monster rearing its head in these discussions and the distorted powers within council, the (departed) city manager and the DDA. It's sad watching this happen. Thanks for your efforts Kunselman.


Tue, May 24, 2011 : 5:12 p.m.

Ms Lowenstein, do you really expect us to believe that the DDA actualy handles the &quot;parking&quot; system? Seriously, perhaps you could tell us in black and white, what the contract amount from Republic Parking Systems is versus income to the DDA? Plain and simple bookkeeping here, is there a P&amp;L available from the DDA that shows how much was paid to Republic Parking? We all know the DDA employees don't sit in the toll booths to collect parking exactly what do they do?


Tue, May 24, 2011 : 12:22 p.m.

Seriously, the decision for police is up to the police chief...I almost spit out my morning coffee. That person would need to pay that police officer, it's not like he's picking the color of his office chair out. The DDA is an out of control entity, bring the money back to provide basic city services..


Tue, May 24, 2011 : 12:18 p.m.

The DDA may have only 4 employees but they contract out management of the parking structures. They have their own website. Not sure how much is spent in maintaining it. I would have expected it to be part of the the Ann Arbor city website.


Tue, May 24, 2011 : 10:55 a.m.

Kunselman is right on track. Be strong and brave young leader! Details may not be right yet, but the general idea is solid and worthy. DDA, council, and our administrators have been building this house of cards to its inevitable conclusion. We need CPA accountability, clear municipal focus and service, and fiduciary and protective responsibilities to the public good. The fat, cushy, country club known as a2 city government/DDA has run its course. Let's de-energize the folly fountain systems that pour cash into shell-game buckets. DDA found its money in the shell and holds the a2 city government to its own game. And, since DDA is now being run by former council members, it is a grand game indeed! Good luck to a2 city government, and all the other municipal organizations, in regaining your rightfully owned taxpayer funds. DDA's folly fountain cash won't be easily returned.

Steve Hendel

Tue, May 24, 2011 : 10:42 a.m.

IF it is true that there are no net parking revenues fattening up the DDA's fund balance (that is, if the DDA is spending all of it's parking revenue on building &amp; maintaining the parking facilities or servicing the corresponding debt PLUS the amount which is transferred to the General Fund each year) then Chairperson Lowenstein is correct-increasing that transfer will only result in less operation &amp; maintenance for the parking facilities. Running an operation like the DDA on 4 or 5 employees makes it a pretty lean operation. On the larger issue of the DDA's independence, or lack thereof, from the City, I have to agree that the City needs to rein in the DDA and remind it's board that the DDA is, in the end, a creation of the City. I would say that incorporating the DDA (in some manner) within the administrative structure of the City and reducing it's board to an advisory role would fulfill that purpose.


Tue, May 24, 2011 : 11:19 p.m.

When do we get to vote for the DDA board?


Tue, May 24, 2011 : 10:31 a.m.

Whoever controls parking fees needs to realize that there is a limit to what people will pay, and also when (day of week, time of day).