Two different versions of a revision to Ann Arbor’s ordinance regulating TIF capture were considered by the Ann Arbor city council at its Nov. 7, 2013 meeting. One was tabled, while the other will move forward for final consideration at the city council’s Nov. 18, 2013 meeting.
The version to be considered by the council on Nov. 18 would set a cap on TIF (tax increment financing) revenue for the Ann Arbor Downtown Development Authority that would not apply at all until FY 2017. It would result in roughly $6.1 million of TIF revenue to the DDA that year, with an estimated return of $300,000 total to the other taxing jurisdictions. The city’s portion of that would be about $180,000, distributed proportionally across all its funds that get income from a captured levy, including the general fund.
It will also include a requirement that the DDA transfer $300,000 of its TIF revenue each year to its housing fund, in support of affordable housing. The definition of ”affordable” housing would be a unit that targets someone with 50% of the area median income. That requirement was added during the Nov. 7 deliberations.
And the version to be considered by the council on Nov. 18 will also include a limit of three terms for board members. That requirement was added as an amendment during council deliberations on Nov. 7.
The first version of the DDA ordinance revision – which was tabled by the council – had been under consideration by the council since Feb. 19, 2013. The second version was the result of recommendations by a committee of DDA board members and city councilmembers that has met four times since Aug. 26, most recently on Oct. 30.
The first version, which was in front of the council for final approval, would have clarified the existing language of the ordinance regulating the DDA’s TIF capture in a way that would disallow the DDA’s preferred interpretation of a restriction in the ordinance. The restriction on TIF revenue that’s already expressed in the ordinance is defined by reference to the amount of growth in taxable value in the DDA district that’s anticipated in the DDA’s TIF plan – a foundational document of the DDA. When those restrictions are applied to the DDA’s TIF revenue, then the amount of TIF received by the DDA would be roughly $4 million in FY 2015. By way of comparison, in the current fiscal year (FY 2014), under its preferred interpretation, the DDA looks to capture approximately $4.5 million of the taxes levied by other jurisdictions.
Under the first version revision, that roughly $0.5 million difference would be proportionally divided among the taxing jurisdictions, which together levy about 27.5 mills of taxes in the DDA district. Proportionally, that translates to: city of Ann Arbor (60%), Washtenaw County (21%), Washtenaw Community College (13%), and Ann Arbor District Library (6%). So out of a $500,000 return to other taxing jurisdictions, the city of Ann Arbor would receive $300,000. That $300,000 would be distributed proportionally to the funds generating Ann Arbor’s levy. For example, part of Ann Arbor’s levy is a transportation tax that is passed through to the Ann Arbor Area Transportation Authority. So of the $300,000 that would be returned to the city, about $40,000 of it would be passed through to the AAATA.
However, the total amount that would be returned on the first version revision is projected to rise each year from that roughly $0.5 million, to somewhere in the neighborhood of $2 million in FY 2017, based on taxes from projects in the downtown that are under construction and already in the approval process.
That contrasts with the second version, proposed by the committee, which sets a cap on DDA TIF revenue that would not apply at all until FY 2017. And that version results in roughly $6.1 million of TIF revenue to the DDA that year, with an estimated return of $300,000 total to the other taxing jurisdictions. The city’s portion of that would be roughly $180,000, distributed proportionally across all its funds that get income from a captured levy, including the general fund.
Another major difference between the first version and the committee-recommended version of the Chapter 7 ordinance change was that the first version includes revisions to governance of the DDA, which the committee-recommended version omitted. However, during the council’s Nov. 7 meeting, a limit of three four-year terms was added to the committee’s version.
The joint committee of DDA board members and councilmembers was established at the council’s July 1, 2013 meeting – after the first version achieved initial approval at the council’s April 1, 2013 meeting. Representing the council on the joint committee are Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA are Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.
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.