Ann Arbor DDA officials question $600,000 city permit fees on parking structure project
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Ann Arbor Downtown Development Authority officials are crying foul over an estimated $600,000 in fees to the city related to the Fifth Avenue underground parking structure project.
At a meeting today, the DDA was given a guaranteed maximum price of $44.4 million for the parking structure from The Christman Co. of Lansing, which is hoping to be hired as construction manager.
A breakdown of cost estimates includes $600,000 for plan review and permit fees the city intends to charge the DDA for the project.
DDA officials mark the ground-breaking of the new parking structure. Ryan Stanton | AnnArbor.com
DDA board member Newcombe Clark thinks the DDA should be exempt from that charge.
"It is our understanding that city projects, which this is, are not subject to plan reviews or permit fees," he said. "It's a percentage of the project and this is a $50 million project, so this is a $600,000 item. That money could go very far in making the project that much better, so we would love to figure out a way to understand the fee and perhaps see if there are alternatives where we could better spend the public's money on a public project."
City Administrator Roger Faser said he hasn't been involved with the issue, but it's a bad time for anyone to ask the city to give up $600,000 after the city just lost $1.2 million in state revenue sharing for the next year. Fraser said the city's planning review and permit fees, under state law, are set up only to recoup costs.
"That fee is based on a formula that staff and the building department work with based on the size of the project and the amount of time we have to spend reviewing it," he said. "We're having, for example, to pay for certain plan reviews and other fees associated with our own building. And if the county builds a building, they pay those same fees."
The city also is asking the DDA to pay a $1.4 million municipal service charge for issuing bonds for the project. The project is a joint effort of the DDA and the city, which owns the property and is soliciting proposals for private development atop the parking structure.
The DDA's governing board is expected to vote next Wednesday on a final agreement to hire Christman as the construction manager for the parking structure project. DDA officials say they're happy with the work Christman has done so far as pre-construction manager, and its numbers fit within the project budget.
"They've been responsive and incredibly intelligent about choices we could make to keep costs under budget and to make sure that the impact on our neighbors is as little as possible," DDA Director Susan Pollay said.
The maximum price guaranteed by Christman means the DDA incurs no additional risk if actual expenses turn out to be higher. If hired, Christman will competitively bid out all components of the project.
Earlier this month, city and DDA officials broke ground at the site, signaling the start of construction work expected to last the next two years. Crews will dig a hole big enough to fill with a four-story, 667-space parking garage.
The largest share of the cost, by far, is an estimated $19.7 million for structural concrete. Other major costs outlined today include $4.9 million for an earth retention system, $4.8 million for electrical and mechanical systems and $1.6 million for mass excavation.
Patrick Podges, vice president of Christman, said each of those cost items could come in 5 percent to 10 percent lower once bids are received.
The price quote from Christman includes nearly $2 million in contingencies, as well as other allowances.
"We're really trying to put together not only a construction plan, but a financial plan for the project that protects the design team and the owner and the contractors," Podges said. "At this stage, not everything is fully designed and fully articulated, so we have to have placeholders that we know will be part of the work before it's all said and done."
Podges said about $1.5 million was saved by going with a revised foundation plan.
Podges said Christman has met with building trades representatives and plans to use union labor for the project. He said the price quote given today is based on a 24-month project duration.
The company plans to put up a video surveillance camera on the downtown library so project officials can monitor the progress of the structure.
Hoping there are no delays, DDA officials joked they're going to put up a sign at the site that says, "No archeologists allowed."
"We pray for no dinosaur bones or burial grounds," Clark quipped.
Ryan J. Stanton covers government for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.
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It's a sad day when City entities fight and scratch over taxpayer money.
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It's a City Charter issue that voters may need to address soon.
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Posted Oct 14 2009
the DDA wants it both ways as per most money grubing capitalists
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Posted Oct 14 2009
I just spoke with Wendy Rampson, planning and development services manager for the city. She backed up what Fraser said, saying that if the city were to not charge for the fees, it would impact the city's ability to pay the salaries of its inspectors and plan reviewers. A number of years ago, the city apparently set up a construction code fund because the contracting community was concerned that building permit fees were being used to subsidize the general fund. Rampson said not collecting fees from the DDA, which represent about 1.5 percent of the project cost, could jeopardize the financial situation in the construction fund. Additionally, DDA Executive Director Susan Pollay tells me the DDA has always pulled permits and paid for them when it has done projects in the past and she personally has no issue with the fees.
AnnArbor.com Staff
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Posted Oct 14 2009
Here's the notes in the Trakit display for the project:
SP08-015
(9/4/2008 11:19 CC) South Fifth Avenue underground parking garage and street improvements for Public Project Review. 785 space structure extending 4 levels below grade. 38 surface parking spaces, stairs and elevators serving the uderground garage and a new public street (Library Lane) extending from Fifth Ave thru Division Street. (9/4/2008 11:27 CC) Fees waived as a Public Project. (8/24/2009 16:37 JSJ) 10/21/08: City Planning Commission recommended Approval 2-17-09: City Council Approved Resolution regarding South Fifth Avenue Parking Garage and Street Improvements Site Plan
The "fees waived as a public project" is signed "CC", which appears to be Chris Cheng, who is listed as the city planner on the project. It's not clear whether that is the entirety of that communication or whether there's more about it in some other document not included in Trakit.
AnnArbor.com Staff
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Posted Oct 14 2009
1. you think they would work this out BEFORE hand.
2. how much "public art" money will be spent. Can we have a giant gushing vagina to go along with the recycled water penis by the german artist at the city building.
3. the people that write up parking tickets all head back to the stable by 530, don't bother putting money in parking meters for the last 1/2 hour of the day.
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Posted Oct 14 2009
Why does the headline say "DDA Officials" when the article only states one official as griping?
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Posted Oct 14 2009
The city should charge the fees to the project. Any other project pays the fees. If they waive the fees for this project, it will reopen the whole issue of contractors funding the planning department. The bottom line is more lawyers and legal fees.
One would hope that a DDA board member would be more interested in fostering long-term relationships with the city and developers than saving a fraction of a percent on one project.
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Posted Oct 15 2009
I believe this is a monumental waste of $50M. Even with the library surface unavailable, the surface lot across the street is still not always full, and the garage across the street from that lot is never full - someone explain why we need 785 more parking spots in downtown Ann Arbor.
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Posted Oct 15 2009
AA.com should mark-up changes to the original article. When I read this yesterday, the "major costs" added to only $28m, now it's $31m.
Does it bother anyone that DDA expected to spend $52 ($49.3 bond proceeds + $8.4 DDA cash less $6m for 5th/Div upgrades), and the maximum price is only $44.4? That's about 15% below expected. Two questions: are there quality guarantees? What will happen to the rest of the $5.6m?
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Posted Oct 15 2009
A brief Q&A with Wendy Rampson:
Q: Did the city did in fact pay the full fees for city hall?
A: Yes, the city has paid for permits and plan review for the work done so far. Additional permit fees will be due before completion of the building.
Q: What is the formula for the fees relative to staff time?
A: The fees are based on a fee schedule which is updated by Council annually as part
of the budget. The 2009 fee schedule is at http://www.a2gov.org/government/communityservices/planninganddevelopment/building/Documents/building_fees_bldg_fee_schedule_09.pdf.
The construction fee structure was evaluated several years ago to bring fees in line with staff and overhead costs. Since that time, the fees have been increased in annual increments.
AnnArbor.com Staff
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Posted Oct 15 2009
I do not feel the parking structure on fifth ave is necessary. To build with the hope of maybe putting something on top of it is crazy. Instead of building this parking lot the city should fix the stadium bridge before someone gets hurt.
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Posted Oct 16 2009
"Someone explain why we need 785 more parking spots in downtown Ann Arbor."
The city wants to put in a 20-some story convention center/hotel above the parking lot. The new parking spaces would be to accommodate that.
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Posted Oct 17 2009