DDA Letter: “No funds should be returned…”

On request from The Chronicle, the Ann Arbor Downtown Development Authority has provided the text of a letter sent by its executive director, Susan Pollay, to the taxing authorities in its tax increment finance (TIF) district, explaining the DDA’s position on the issue of redistributing TIF revenue. From the letter text: “There can be no doubt that as long as the DDA is spending its TIF monies according to its plan, no funds should be returned to the taxing units. All of the DDA TIF is now committed to debt service for the existing downtown development projects and the administration ofthose projects.”

Earlier this year, in May – after city of Ann Arbor staff pointed out a provision in Chapter 7 of the city code that appears to cap the amount of TIF revenue that’s captured by the Ann Arbor DDA – the DDA returned a total of $473,000 to Washtenaw County, Washtenaw Community College, and the Ann Arbor District Library. The DDA had also calculated that the city of Ann Arbor – as one of the taxing authorities – was owed $711,767, but the city waived payment of that amount.

These amounts represented a total dating back to 2003. The DDA previously had calculated that it should not have received that “excess” TIF revenue since 2003, and that the excess revenue should have been retained by those taxing authorities.

The letter articulates the DDA’s new position, voted on by the DDA board on Wednesday, July 27, which is that the money need not have been returned. Previously, the method used by the DDA to calculate the excess TIF was disputed, with significant implications for future TIF capture. The DDA’s new position, if it prevails against possible challenges from other taxing authorities, would render moot any discussion about the method of calculation. [Previous Chronicle coverage: "Ann Arbor DDA: No Redistribution Required"]

The DDA’s letter includes a recitation of some of the history of the issue from earlier this year. It portrays the city of Ann Arbor as characterizing the Chapter 7 issue as an oversight by the city’s own financial staff: “City finance staff presented the issue as an ordinance provision they had neglected to implement in the distribution of TIF funds over the last several decades.” [.pdf of DDA letter text to other taxing authorities]