City Accepts Prior Payment for Excess TIF

At the May 31, 2011 session of its meeting that had begun two week before, on May 16, resumed briefly on May 23, only to be immediately recessed, the Ann Arbor city council agreed to accept prior contributions of the Ann Arbor Downtown Development Authority toward city of Ann Arbor projects as payment for the city’s share of excess tax increment finance (TIF) capture that the DDA has received since 2003.

At a special meeting on Friday, May 20, the DDA had calculated that a total of $1,185,132 should be returned to taxing authorities that levy property taxes in the downtown district. The city’s share of that is $711,767. The council’s resolution states that the acceptance of prior contributions to city projects on this occasion should not be interpreted as a precedent about the return of any future excess TIF capture that would be owed to the city under its DDA ordinance.

The assumptions on which the DDA based its calculations for the excess may not necessarily be acceptable to the other taxing units, which are due – from the DDA’s view – to receive a total of $473,365. Those other taxing units are: the Ann Arbor District Library; Washtenaw County; and Washtenaw Community College.

Those assumptions include the idea that the “excess” should be based on the “optimistic” projections in the DDA’s TIF plan – which reduces the excess compared to the “realistic” projections. The DDA also assumes that the excess should be computed year to year, not cumulatively – which also results in a lower excess amount. [.pdf of table showing DDA's calculations in detail]

It was uncertainty about the status of the excess TIF capture, and the city’s contract with the DDA (under which the DDA operates the city’s parking system) that led the council to delay approving its budget at its May 16 meeting.

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]