Ann Arbor Downtown Development Authority board members gather today for a retreat during which the board discussed priorities for the coming years.

Ryan J. Stanton | AnnArbor.com

With more than $50 million in capital projects under way, including a new underground parking structure downtown, Ann Arbor Downtown Development Authority officials say money will be tight for a while.

The board held a two-hour retreat today to discuss in detail the organization's finances and priorities for the coming years.

"In the years when we were really flush and the economy was great, we could spend money on whatever we wanted to. Like everybody now, we have to really set priorities," said DDA Chairwoman Joan Lowenstein.

During the retreat, DDA board members were asked to choose from a list of future downtown projects, ranking them based on importance.

Topping the list was having the DDA take control of the redevelopment of city-owned surface lots downtown, including hiring consultants and commissioning studies to help come up with a plan. That's estimated to cost $50,000 to $75,000 a year.

DDA board members also expressed strong interest in purchasing downtown land with the goal of redevelopment.

On a similar note, board members showed interest in paying for enhanced footings and foundations at the Blake Transit Center site on Fourth Avenue. The idea is to encourage development spanning the old YMCA lot and the transit center site.

The Ann Arbor Transportation Authority plans to spend $4 million to construct a new two-story building to replace the existing transit center. DDA Executive Director Susan Pollay said a two-story building would be an "awful waste" of that space.

Board members agreed with Pollay.

"Our concern is that if something is going to be built right there, in the plum area of our downtown, we want to make sure there's potential to do other things besides just put a two-story bus station," Lowenstein said. "There might be somebody who comes along eventually and wants to build on that lot next door and says, 'Hey, we would like to cantilever over onto the air space over there.' And so you would want to be able to have that capability."

Also near the top of the priority list was a $300,000 sidewalk expansion project on the west side of the 300 block of South State Street to encourage walkability and sidewalk activity.

DDA board members also showed interest in undertaking improvements along South University to address aging sidewalks and underground utilities, and to regain sidewalk space by redesigning tree planters. The project is estimated to cost $2 million to $3 million.

DDA board member Roger Hewitt offered an overview of the agency's financial picture today.

Ryan J. Stanton | AnnArbor.com

Ranking lower on the list of priorities was a $500,000 reconfiguration of Liberty Plaza, an urban park at the corner of Liberty and Division. DDA officials want to modify the area to better connect it with the Library Lot, where the underground parking structure and a public plaza is being built. A hotel and conference center also could be built on the site.

Other projects on the DDA's list:

• Build out the Fourth and William parking structure's first floor for a getDowntown office plus transit alternatives (e.g. Greyhound, etc.) — $300,000
• Sign purchase/installation to set the boundaries of different parking rate zones as part of the DDA's demand management strategy plan — $35,000
• Install a "nest" on the roof of Fourth and William to provide discounted or free evening employee parking — $75,000
• Install cameras in the parking facilities — $900,000
• Lease fiber-optic cable to all major parking facilities — $60,000 a year
• Subsidy for additional enhance transit service (e.g. express bus to and from Ypsilanti, evening service to and from park-and-ride lots, and increased Night Ride service outside Ann Arbor) — $100,000-$150,000 a year.
• Sponsor four to six downtown police officers/beat cops — $500,000-$750,000 a year
• Brick street repairs in Kerrytown, including replacing broken storm sewers and curb modifications to enhance pedestrian safety — $3.5 million to $4 million
• Downtown alley repairs (two or three), including addressing broken storm water mains, broken pavement, enhanced lighting for safety — $500,000
• Modify wayfinding signs, including correcting text — $50,000
• Grants for downtown affordable housing, including possibly Baker Commons — $500,000-plus

"We don't consider any of these projects to be fluff," Lowenstein said. "There's a lot of interest, for example, in beautifying and improving the South University area. And completing the project we actually do have down on paper, which is the whole Kerrytown area."

The DDA was created by the City Council in 1982 with the mission to undertake public improvements to strengthen the downtown area and attract new private investments. In 2003, the City Council extended the DDA’s tax-increment financing authority until 2033.

The DDA now collects nearly $3.9 million a year in local taxes. Its current annual parking revenue is about $15.2 million, while total income is about $21.2 million.

The DDA's tax collections and parking revenues are on an upward trend, but the authority will need to be careful with its cash after drawing down its fund balances to finance capital projects, said DDA board member Roger Hewitt.

"Considering we're undergoing $50 million worth of projects right now, I think we're in fine shape," he said. "We've got adequate fund balances. We're never really going below $3 million and we'll still have at least some funds in the next few years to do some minimal things."

Board members generally agreed the DDA should not let the fund balance dip below 15 percent of the total budget. The latest figures show the fund balance — even after transfers to the city — would reach a low of 15.4 percent in 2012-13.

The DDA is setting aside about $508,600 a year to help pay for the city's new police-courts building. It also is setting aside about $500,000 a year for alternative transportation projects.

By 2012-13, the DDA will be paying more than $3 million a year in debt service for the underground parking structure and other improvements along Fifth and Division. The costs are being split between the TIF fund and parking revenues.

DDA board member Leah Gunn said she thinks it's appropriate that the DDA cut back on TIF projects for a while and consider the long-term picture. Records show the DDA plans to cut back on funding items like bike racks and energy grants for businesses.

The 10-year plan discussed today assumes the DDA will transfer a flat 15 percent of gross parking revenues to the city's general fund in each of the next 10 years. The latest estimate is that the total transfer would be about $2.4 million in 2011-12.

Mayor John Hieftje said he's pleased with where negotiations between the city and the DDA appear to be headed.

"I've said for many years the DDA is an arm of the city, and during this time of a national and statewide fiscal crisis, it seems perfectly appropriate that we'd be working together, and that's what we're doing," he said.

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.