Ann Arbor DDA officials question $600,000 city permit fees on parking structure 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.