City Takes First Step for Barracuda Tax Break

At its July 2, 2012 meeting, the Ann Arbor city council voted to set a public hearing under Michigan’s Act 198 of 1974 on establishing an industrial development district for 317 Maynard St. in downtown Ann Arbor. Setting the hearing – for Aug. 9, 2012 – is the first of several actions that will be necessary to grant a tax abatement to Barracuda Networks, which is relocating from Depot Street to the downtown property owned by First Martin Corp. A letter dated June 1, 2012 from First Martin to the Ann Arbor city clerk requested the establishment of the district.

After the public hearing on the district, the council will need to vote on establishing the district. Then Barracuda Networks will need to apply for the abatement. The city council will need to vote to set another public hearing – this time on the abatement. And then the council will need to vote on the abatement itself. According to reports from Barracuda, the value of the abatement to be requested is estimated at around $85,000.

The city is prohibited by state statute from abating taxes on any more than 5% of the total state equalized value (SEV) of property in the city. Responding to an emailed query in May 2012 (in connection with a tax abatement for Sakti3), Tom Crawford, the city of Ann Arbor’s chief financial officer, wrote to The Chronicle that total SEV for the city for 2012 stands at $5,294,974,640, and the total SEV of abated property in 2012 is $8,935,974. That works out to 0.169% – well under 5%.

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]