Ann Arbor Faces Possible Budget Delay

At an Ann Arbor city council work session held May 9, 2011, mayor John Hieftje raised the possibility that the council’s approval of the city’s budget could be delayed this year. According to the city charter, the city administrator’s proposed budget must be adopted with any amendments no later than the council’s second meeting in May. Hieftje suggested that the council’s second meeting in May, which is now scheduled to start on May 16, might be recessed and continued until the last Friday of the month (May 27).

The additional time would allow for greater clarity on an issue related to the tax increment finance (TIF) capture for the Ann Arbor Downtown Development Authority. The city brought to light last week that in passing captured tax revenue to the DDA, the city’s financial office has in recent years not factored in a provision of the city’s DDA ordinance that requires excess TIF capture to be divided proportionally among the taxing entities whose taxes are captured. The excess is defined in terms of the actual increase in the tax base, as compared to the increase in the tax base that is anticipated in the DDA’s TIF plan. [Previous Chronicle coverage: "DDA Delays Parking Vote Amid TIF Questions"]

At Monday’s work session, the city’s CFO and interim city administrator Tom Crawford estimated the “rebate” to the city of DDA tax capture for FY 2012 at around $450,000.

Part of the context of the TIF issue is a contract with the city of Ann Arbor, under which the DDA operates the city’s public parking system. That contract is currently being renegotiated. Under the current contract, with runs through 2015 with a three-year option to renew, the city would receive about $2 million less in public parking revenues in FY 2012 than the new contract calls for. But the exact financial terms of that contract are still being worked out.

Under Michigan’s Open Meetings Act, a meeting that is recessed for more than 36 hours can be reconvened only after posting public notice at least 18 hours before reconvening the recessed meeting.