Time to Get On Board

We are conditioned to think and obsess about the unemployment rate, but when economists look at revitalizing urban areas, they now talk about prosperity rather than unemployment. Michigan doesn’t do too well in either unemployment or per capita income, but if we start focusing more on smaller, regional improvements, it looks like we have the raw materials to succeed.

In a presentation last week to the Ann Arbor-Ypsi Chamber of Commerce, economist Lou Glazer outlined what it takes to make Ann Arbor a destination for new businesses and, most importantly, young professionals who will run and staff those businesses. The old idea that a high-tech company can “do business anywhere” is no longer true. Knowledge-industry companies – those in high-tech, healthcare, media, entertainment – want to be where the new college graduates are, and that turns out to be in the center of big cities.

Seventy-five percent of recent college graduates choose to live in big cities. The most popular are New York City, Chicago, and Los Angeles, in that order. Ann Arbor should be in the running, but one problem, according to Glazer, is that the University of Michigan sucks up a lot of the talent pool. Young professionals have to want to stay here, and if they do stay here, the businesses will follow. Chicago has a mayor, Rahm Emanuel, who has promised that Chicago will be the city of choice for Big 10 graduates. Will Ann Arbor’s next mayor throw down the gantlet?

Quality of place matters to these adorable millennials. Music, art, design, cool food and shops are all big draws. But what do they love most? Get ready for it, because it’s a surprise – transit. At the Chamber of Commerce program, a panel of young business owners talked about what attracts them. They want walkable communities. They don’t want to own cars. They want to be able to live in funky Ypsilanti (which Glazer describes as Ann Arbor’s Brooklyn), hop on a train to Ann Arbor, hop back on to go to Depot Town, then take a ride to the DIA.1lrt0625

Brendan Cavendar, a young UM graduate who is one of the brokers working on the sale of the city’s old YMCA lot, says availability of Zipcars, short-term car rentals, and the go!Pass, free bus rides for downtown employees, has been crucial in attracting businesses to downtown.

Several huge transit initiatives are bubbling in Ann Arbor and what happens in the next couple of years could decide whether Rahm Emanuel gets all the college grads or whether Ann Arbor and Ypsilanti get to share some of them. First is the AAATA “Moving You Forward” 5-year transit improvement plan. The AAATA will likely go to the voters for a millage increase to allow better bus service in this region. Hopefully they will not be stymied by the very parochial Ann Arbor City Council. Councilmembers Jane Lumm, Sally Petersen, Sumi Kailasapathy, Steve Kunselman, and Mike Anglin have already needlessly delayed the appointment of Ypsilanti Township representatives to the AAATA board. They are, in a short-sighted way, afraid that Ann Arbor residents will be subsidizing riders from Ypsi and Ypsi Township. But even though township residents don’t currently pay an AAATA millage, the township does buy into bus service, so these residents are paying their way.

Councilmembers perseverating about fixing potholes could also deny us the opportunity for state-of-the-art train service. They finally capitulated and allowed a city match for federal money to study the best place for a new Amtrak train station, but whether they will actually listen to the results of that study remains to be seen.

Finally, The Connector, a collaborative study about high-capacity transit through Ann Arbor, has just finished more public workshops to help determine routes and select the modes of transit that will best suit this population. Again, city councilmembers have been less than enthusiastic and Kunselman even gave as one of his reasons for wanting to cap Downtown Development Authority funding that the DDA might want to spend money on trains. Of course the DDA should cooperate with The Connector. It is a shame, though, that some of the councilmembers value their reputations as obstacles to progress.

High on Ann Arbor

In a previous post, I noted that Ann Arbor’s downtown neighborhoods had suffered as a result of  suburban sprawl and shopping malls. For another take on how the downtown neighborhoods survived, what follows is an account by Steve Cain, former reporter for “The Ann Arbor News,” now re-branded as “The Ann Arbor News.” — JL 

With the opening of Briarwood Mall, a downtown devoted to traditional retailing began what in most cities would have been a death spiral. Ann Arbor’s downtown took a pretty big hit before it re-emerged as a vibrant center of restaurants, bars, and mostly upscale specialty shops.

Joan credits the Downtown Development Authority with leveraging the turnaround both through creating parking and other activities. I think there is no question that it would not have happened without the DDA. But I believe there were two other factors in the mix, the most important being the wealth associated with the University of Michigan. In addition, I would suggest that downtown investments from the city’s drug underground were an important bridge during the transition period.

I grew up in Ann Arbor, was a reporter for old Ypsilanti Press and then Detroit News before joining The Ann Arbor News in 1983. At various times I covered the DDA, the city, the University of Michigan, the criminal justice system, and worked special projects.

During this time, the Federal Bureau of Investigation had been granted concurrent jurisdiction with the Drug Enforcement Administration, but the for most part Ann Arbor wasn’t on the DEA’s map. In the late 1980s and 1990s, the FBI took down Ned and Fred Shure’s marijuana network, which had been one of the largest in the country, a second fairly good sized pot conspiracy, and a couple of cocaine distribution networks.

From informants, defendants who talked, wire taps, and a close relationship with the Ann Arbor Police, the feds learned of others who had burned out or had the good sense to take their profits and abandon the life. They were jammed with active cases, and there wasn’t much profit in going after folks who had seemingly gone straight.

I had good sources in both law enforcement and in the illicit world (although the Shures had no use for me). I was aware of a number of bars and restaurants purchased or founded by former dealers or dealers who were transitioning out of the drug business. And I spent scores of hours at the Washtenaw County Register of Deeds tracking downtown properties that had been rehabbed by those folks.

But there was a vast gulf between what I was pretty sure I knew and what I could prove on the record. It would have been a great story, but a proper journalist doesn’t name names without proof.

But just to shake the trees to see what fell out or perhaps because I have a mordant sense of humor, I passed the word that I was working on a story tentatively titled “How the Dopers Saved Ann Arbor.”

One evening I took my wife out to dinner at a quite nice restaurant owned by one of those fellows. We had never met, but he had recognized me when my wife and I walked in the door. He was bouncing from foot to foot, like a cat on a hot tin roof. As he showed us to our table, he made sure we were separated by at east one table length so I couldn’t initiate casual conversation.

This was two decades ago. The people I knew about have mostly passed from the scene. But the DDA remains, and it still has work to do because no city can afford to take a vibrant downtown for granted.

Investing in Downtown

American cities like Ann Arbor share similar 20th Century stories:  People came to downtown stores to do their shopping and, in the first half of the century, downtowns were the retail and business centers. The second half of the century saw the decline of downtowns, with suburban sprawl and shopping malls. Southeast Michigan has a unique window on this because Oakland County’s  A. Alfred Taubman is a shopping mall pioneer and started his mall development company in 1950.

Politically, Ann Arbor’s downtown neighborhoods are like any others and do not have separate city council representation or governance. But downtown is different because of its importance to the city’s economy. When downtown started to wane, so did the city as a whole. The first inkling of this was in 1982. Downtown parking garages were crumbling and too expensive to fix with funds from general city taxes alone. Using a fairly new state-sanctioned mechanism, the city established a Downtown Development Authoritly that could concentrate taxes in the downtown. The city then turned the parking system over to the DDA so that parking garages could be maintained and parking could become more efficient.DDA Photos 016

As it became more and more evident that downtown is now the engine that drives the city’s economy, the DDA has shifted some of its focus from parking to infrastructure development that can encourage commercial and residential growth downtown. Parking is still an important tool for economic development because, for most businesses seeking to relocate downtown, the first question is about parking for employees or customers. The DDA has been able to use parking to encourage new business, run the system without losing money, and return $3.5 million per year to the city for its general fund.

Another source of funding for the DDA is Tax Increment Financing, or TIF. For a very detailed and accurate description of how TIF works, a good source is the Middle of the Left blog. Basically, I see TIF as a kind of titration. A very small percentage of tax monies – the increment or “delta” from increases to tax values from new buildings or renovations – are calculated by the city’s assessor and transferred to the DDA to be spent in the downtown, which also includes South University and a small dog leg down South Main Street. These taxes are titrated from the taxing authorities: Washtenaw County, the city of Ann Arbor, Ann Arbor District Library, and Washtenaw Community College. Ann Arbor’s DDA does not use any public school taxes.

TIF money is an investment in downtown, the core of the city. Were it not for TIF, improvements to the downtown would be on a list with all other city projects. And, these downtown projects would have no political advocate because no ward encompasses all of the downtown. Sometimes progress can’t afford to be last on a list. One example is Zingerman’s Deli. Zingerman’s is arguably one of Ann Arbor’s most recognizable landmarks and brings thousands of shoppers to the Kerrytown commercial area.

Zingerman’s wanted to expand right around its Kerrytown footprint because it believes in character and believes in downtown Ann Arbor. Even so, the company got little help from the city or the city council, especially when the Historic District Commission got in the way with “protection” for a burnt-out but “historic” house on the property. Zingerman’s needed some matching funds in order to leverage state brownfield money that can be used to remedy not only environmental problems but also urban blight problems. The DDA stepped in and provided sidewalk improvements (you’ll see them if you go to the deli this week) as the needed local contribution to the state funding. Zingerman’s can stay in Kerrytown and thousands more customers can contribute to the local economy. It has been a worthwhile investment for the DDA and for the city.

One would think that investing in downtown would be a goal city leaders could embrace. Indeed, the council at its January 2013 retreat identified economic development as a priority. It did not, however, allocate any money to implementation of that priority. Shortly afterwards, some of the councilmembers sought to actually stop investing in downtown by capping the amount of TIF the DDA can capture. A resolution on the November 7 council agenda would do exactly that.

Councilmembers Kunselman and Kaliasapathy are leading the charge on this, but can’t explain how investing less money in the downtown can help the city. Councilmembers Lumm, Petersen and Anglin are similarly inclined to spend less money on the city’s main economic engine. They have somehow failed to pay attention to the wayfinding signs and are headed in the wrong direction.