A change to Ann Arbor’s ordinance (Chapter 7) regulating the Ann Arbor Downtown Development Authority’s tax increment finance capture and its board governance has been given final approval by the city council. The action came at the council’s Nov. 18, 2013 meeting on a 9-2 vote. Dissent came from Christopher Taylor (Ward 3) and Margie Teall (Ward 4).
The version of the Chapter 7 ordinance change given final approval by the council would allow for several million dollars in additional TIF capture by the DDA, compared to a different version that had been tabled. The version in front of the council on Nov. 18 set a cap on DDA TIF revenue that will not apply at all until FY 2017 and will result in roughly $6.1 million of TIF revenue to the DDA that year. It will mean an estimated return of $300,000 total to the other taxing jurisdictions in that year.
On Nov. 7, during deliberations when the council gave the change initial approval, the council also added a requirement that the DDA budget at least $300,000 each year for affordable housing projects, with “affordable” defined as targeting residents with 50% area median income (AMI).
The outcome of deliberations at the council’s Nov. 7 meeting began with a decision to table a version of the Chapter 7 changes that had been under consideration by the council since Feb. 19, 2013. The council then gave initial approval on Nov. 7 to a different version of the Chapter 7 changes, which were ultimately given final approval on Nov. 18. Those recommendations came from a committee of DDA board members and city councilmembers that has met four times since Aug. 26, most recently on Oct. 30.
The joint committee of councilmembers and DDA board members was established at the council’s July 1, 2013 meeting – after the first version of the ordinance change achieved initial approval at the council’s April 1, 2013 meeting. Representing the council on the joint committee were Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA were Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.
The amount of TIF not captured by the DDA will be proportionally divided among the taxing jurisdictions, which together levy roughly 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%).
The $300,000 total to be divided by the other taxing jurisdictions in FY 2017 compares to roughly $2 million that would have been divided among them under the tabled version of the Chapter 7 revision. The tabled version essentially clarified the enforcement of existing language in the ordinance. In both versions – assuming that new construction in the DDA district continues to take place at a healthy pace – taxing jurisdictions would continue to receive additional funds into the future after FY 2017.
Under the change approved on Nov. 18, the city’s share of the estimated $300,000 in excess TIF in FY 2017 will be about $180,000. But that will be distributed proportionally across the city’s funds based on the levy associated with the fund. For example, out of the $180,000, the general fund will get about $65,000. That compares to $430,000 that the city’s general fund would have received based on the tabled Chapter 7 approach.
Although the committee did not put forth a recommendation on governance, the tabled version included various provisions on changes to governance. Those governance revisions included: (1) a two-term limit for service on the DDA board; (2) a prohibition against elected officials, other than the mayor, serving on the DDA board; and (3) service of the mayor on the board (a possibility explicitly provided in the DDA state enabling legislation) subject to annual approval by the city council. If the council did not approve the mayor’s service on the DDA board in a given year, then that spot would go to the city administrator, according to the tabled version.
On Nov. 7, after debating the issue, the council amended the new version to include a limitation on terms. The version given final approval on Nov. 18 will impose a limit of three four-year terms, with additional terms possible only after a four-year lapse.
The council held a public hearing on this item at the Nov. 18 meeting, with nine people addressing the council – including DDA board chair Sandi Smith. Most speakers were supportive of the DDA, although some called for more oversight and equity with other taxing jurisdictions. Deliberations by councilmembers lasted about 30 minutes and included some harsh criticism from Taylor, who called the ordinance change a power play.
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]