Ann Arbor DDA Ordinance Delayed Until Oct. 21

Revisions to the city ordinance regulating the Ann Arbor Downtown Development Authority tax increment finance capture have again been postponed – until Oct. 21, 2013. The city council action to postpone came at its Sept. 16, 2013 meeting.

The city council and the DDA board have a joint committee that is working out details of an alternative to the ordinance amendments that have already been given initial approval by the council.

The initial DDA ordinance revisions that appeared on the council’s Sept. 16, 2013 agenda were awaiting a second and final vote by the council. The amendments to Chapter 7 included various changes to governance, including term limits for board members, as well as clarifications to the existing language on TIF capture. The amendments would have enforced the existing language of the ordinance in a manner that would have impacted the DDA’s TIF revenue in a way roughly matching the DDA’s projected revenues in its 10-year planning document. However, since that 10-year document was last updated, the amount of new construction in the DDA district has resulted in significant increases in the taxable value on which TIF is computed. So about $1 million a year is at stake – which could be distributed to the other jurisdictions whose taxes the DDA captures, instead of being collected by the DDA.

Under the existing ordinance language, the amount of DDA TIF capture is calibrated to projections in the DDA TIF plan, which is a foundational document for the DDA. The different conceptual approach would establish a basis level for the maximum captured taxable value in the DDA district and then set some clearly defined annual increase, keyed to a specific percentage or some variant of a consumer price index (CPI).

For example, the current taxable value on which the DDA captures taxes is roughly $137,000,000. That yielded about $3.76 million in TIF revenue to the DDA in fiscal year 2013, which ended on June 30. If that $137,000,000 were used as a basis for the cap, then a 3% increase applied annually would give the DDA a maximum of $5.063 million in 2023. In any given year, the DDA would receive the lesser of two values: (i) the unconstrained TIF captured on the taxable value; or (ii) the value of the cap.

A working document used by the joint committee at its Sept. 10 meeting showed two basic scenarios, one with a basis of $137,000,000 in taxable value for FY 2013, and a second one starting with a basis of $167,000,000 for the following year, in FY 2014. The second one received more interest from the committee.

The council had postponed a final vote on the changes most recently at its Sept. 3, 2013 meeting. Four months earlier, on May 6, 2013, the council had voted to postpone the final vote until Sept. 3, after giving the changes initial approval at its April 1, 2013 meeting.

Two meetings of the joint committee of DDA board members and city councilmembers have taken place about the ordinance changes – one on Aug. 26, 2013 eight weeks after the committee was appointed, and another one on Sept. 10, 2013.

At the Sept. 10 meeting, the group appeared to be ready to recommend that the council table the initially-approved ordinance changes and start from scratch with a new conceptual approach, likely shedding the proposed changes to governance with the fresh start.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]