With notable financing foreclosures like Ashley Terrace, and the crash of 2008, how much property tax is actually and currently being collected by other jurisdictions because the property value exceeds the “initial increase?” What is the actual benefit to these jurisdictions that is being realized (when and if it is properly shared with these jurisdictions)?

Several recent construction projects inside the DDA boundary were built after tearing down an existing building or buildings and in some cases, displacing businesses out of the DDA boundary. During the construction period of 1-2 years, I’m told the property tax rate drops from that collected on the previously existing buildings, to that of a vacant lot and of course, any personal property taxes collected on the businesses are lost as well. (Not to mention jobs and amenities for residents. See annarbor.com article in today’s edition about the relocation of Delux Drapery as an example.) Is this temporary loss of revenue to all jurisdictions being factored in to the figures for later tax captures? Is the “initial increase” in value of the new construction based on the previous building’s tax rate or on the property’s value as a vacant lot during construction?

I don’t think anyone is confused about the specific features of DDA TIF capture, so I think that’s completely off point. Also off point is the question of whether the DDA benefits other juridictions through its use of TIF capture and the investments the DDA makes with that money. I’m happy to stipulate that the DDA’s use of TIF has immensely benefited not just downtown, but the city of Ann Arbor and every other municipality in Washtenaw County, not just those from which the DDA captures taxes. I’m happy to stipulate that not “just for the sake of argument,” but because I actually believe that, and will fight anyone who says different.

The sole question here, however, is what the correct interpretation is of Chapter 7 of the city code and how much TIF is legally available to the DDA. Some historical facts:

1. May 2011: The Ann Arbor city attorney’s office and financial staff analyzed Chapter 7 as requiring return of TIF money by the DDA to other jurisdictions.
2. May 2011: The DDA’s own legal counsel, Jerry Lax, analyzed Chapter 7 as requiring return of TIF money by the DDA to other jurisdictions.
3. June 2011: The DDA was confident enough in the accuracy of its legal counsel’s opinion that it wrote checks totaling over $400K to other jurisdictions.
4. June 2011: The Chronicle published an analysis showing that the method used for the DDA’s calculations is likely wrong. The key difference is that when the calculations are done in a common-sense (cumulative) way, the outcome is that the amount to be returned to other jurisdictions would have been substantially greater last year. More importantly, that analysis showed that the proper method of calculation results in a recurring disbursement, not just rare one-time disbursements, to other taxing authorities.
5. July 2011: The DDA reverses its legal position, rendering the method of calculation moot. The DDA contends that Chapter 7 doesn’t actually require the DDA to return money to other jurisdictions.

Those historical facts lead me to venture that nobody, not even the DDA, actually believes the interpretation of Chapter 7 that the DDA is now giving it. I think it’s fair to conclude that the DDA was driven to re-analyze the interpretation of the language of the Chapter 7 law by a desire to achieve a specific financial outcome for the DDA. The DDA is simply laying a bet that a lawsuit won’t be filed. And it’s probably a good bet. One issue that bears sorting out first is the question of legal standing: Who would be able to file such a lawsuit? Any Ann Arbor taxpayer? Only a taxpayer in the DDA district? Only another governmental body?

Last night, councilmembers raised the specter of the DDA’s possible inability to meet its financial obligations – if Chapter 7 were to be interpreted as Kunselman advocated. One way to ground that possibility in reality is to look at the most recent version of the DDA’s 10-year plan.

DDA board member Roger Hewitt told the city council during the budget presentation this spring that it’s a document that is updated quarterly. But when I asked DDA staff recently for the most recent copy of the 10-year plan here’s the answer I got: The most recent version of the 10-year plan is from last year – May 2011.

So I think it’s reasonable to ask, that for its next meeting on June 6, the DDA board be presented with an updated 10-year plan. I also think it’s reasonable for the board to be presented with an alternate version of the 10-year plan that is based on the Chapter 7 interpretation in Kunselman’s resolution. I believe this would demonstrate clearly that the Ann Arbor DDA could comfortably meet all of its current financial obligations, even under the the DDA’s dis-preferred interpretation of Chapter 7. If I’m wrong about that, the 10-year plans would clearly show it.

So show me, how about?