June 2, 2014: City Council Meeting Preview

Agenda dominated by items related to the physical attributes and layout of the city – city-owned physical assets, land use and planning.

The council’s first meeting after adopting the budget for fiscal year 2015 – which was approved on May 19, 2014 – features a housekeeping adjustment for the current year’s budget, so that expenditures don’t exceed allocations.

Screenshot of Legistar – the city of Ann Arbor online agenda management system. Image links to the next meeting agenda.

Screenshot of Legistar – the city of Ann Arbor’s online agenda management system. Image links to the June 2, 2014 meeting agenda.

But the June 2 meeting agenda is dominated by items related to the physical attributes and layout of the city. Several items deal with city-owned physical assets, while several more involve land use and planning.

Possibly one of the more controversial agenda items related to physical infrastructure – and future development in the city – is a contract extension with CDM Smith Inc. for work related to the city’s footing drain disconnection (FDD) program. While the city council suspended the program in certain areas of the city in 2012, it continued in other areas, backed by the city’s ordinance under which the city can require residents to disconnect their footing drains from the sanitary sewer system.

Also not suspended was the city’s developer offset mitigation program, which requires developers to offset the increased flow from new construction into the sanitary sewer system. The vote on the CDM Smith Inc. contract extension was postponed from the council’s May 5 meeting. The dollar amount of the contract extension has been substantially reduced in the meantime – from about $750,000 to $143,000.

Part of the backdrop of the CDM Smith contract extension is a lawsuit that’s been filed against the city, challenging the legal foundation of the footing drain disconnect ordinance. The city sought to remove the case from state court to the federal system, but at a hearing on the matter this week, a federal judge indicated he’d be remanding the case back to the Washtenaw County 22nd circuit court.

City assets on the June 2 agenda include trees – as the council will be asked to approve the city’s urban and community forest management plan. The council will also consider a resolution on the city’s possibly most recognizable asset – the city hall building. The resolution would remove a $4 million renovation of city hall (a “reskinning”) from the city’s capital improvements plan for 2017 and 2018. This resolution was postponed from the council’s May 19 meeting.

Another city-owned asset on the agenda is the Library Lane underground parking garage. The council has already directed the city administrator to engage a real estate broker to test the market for the development rights for the surface of the garage. The resolution on the June 2 agenda, which was postponed at the council’s April 7 meeting, would set a policy to deposit 50% of the net proceeds from the sale of the development rights into the city’s affordable housing trust fund.

Land use and planning items on the June 2 agenda include a roughly $300,000 contract for study of the State Street transportation corridor. Related to transportation infrastructure, the council will also be asked to approve resolutions that move along the process of special assessing property owners on Stone School Road for the cost of installing a sidewalk on the west side of the road in connection with a road reconstruction project.

Also related to land use, three Ann Arbor housing commission properties will be given initial consideration for rezoning. A site plan and associated rezoning for the Delta Gamma house will be given final consideration. Also up for final consideration is a revision to the ordinance regulating drive-thrus. And the site plan for a new Ruth’s Chris restaurant to be located downtown on South Fourth Avenue will be given consideration.

A rate increase for Ann Arbor water, sewer and stormwater rates is on the June 2 agenda for final approval.

Two items connected to parks and recreation appear on the agenda. One is approval of the receipt of funding for a program that helps Bridge cardholders purchase local produce at the farmers market. The second item is approval of a five-year agreement with the Community Action Network to continue operating the city’s Northside and Bryant community centers.

The council will also be considering a resolution in support of the local development finance authority’s application to the Michigan Economic Development Corp. for a possible 15-year extension of the arrangement under which the LDFA captures taxes. The captured taxes are used to fund a business accelerator that’s operated by Ann Arbor SPARK through a contract with the LDFA. Without an extension, the LDFA would end in 2018.

This article includes a more detailed preview of many of these agenda items. More details on other agenda items are available on the city’s online Legistar system. The meeting proceedings can be followed Monday evening live on Channel 16, streamed online by Community Television Network starting at 7 p.m.

Amend Current Year’s Budget

On June 2 the council will consider a resolution amending the current fiscal year’s budget (FY 2014) to ensure that expenditures do not exceed appropriated amounts. The budget amendment will ensure compliance with Public Act 621 of 1978.

The total requested general fund budget amendment is $60,000. For all other funds, the amendment to be considered by the council on June 2 totals $310,000.

The non-general fund amount will cover right-of-way maintenance and purchase of materials that were necessary to deal with the severe winter weather. The general fund amount was the city’s cost for the Ann Arbor Area Transportation Authority’s special election held on May 6. That amount will eventually be reimbursed by Washtenaw County – which in turn will receive reimbursement from the AAATA to cover the roughly $100,000 cost of the election.

FDD Program Contract Extension

A contract extension with CDM Smith Inc. for continued work as part of Ann Arbor’s footing drain disconnection (FDD) program appears on the June 2 agenda. It had been postponed at the council’s May 5, 2014 meeting.

In the interim, the dollar amount of the contract extension has been reduced from $748,106 to $143,440. That reflects a reduction in the scope of the work. The original May 5 resolution called for the following activities to be funded: citizen support ($36,928); FDD citizens advisory committee meetings ($24,180); information management for sump pump monitors ($93,707); developer offset mitigation (DOM) program support; ($95,213); and multi-family FDD implementation ($498,005).

No longer a part of the scope of work in the revised June 2 resolution are the FDD citizens advisory committee meetings, information management, or the multi-family FDD implementation. The revised memo describes how the funding would only provide a bridge until recommendations from a study group have been received, which will determine the future of the FDD program:

This amendment would provide the services needed to bridge the gap until the SSWWE [Sanitary Sewer Wet Weather Evaluation] Project recommendations have been made. Presently, the anticipated timeline for completion of the SSWWE Project is in the autumn of 2014. That does not allow sufficient time to issue a new RFP, collect and review proposals, award a contract, and bring a new consultant up to speed to manage the remaining FDD and DOM work outlined above. Existing City staff does not currently have the available resources or expertise to perform the inspections required for the DOM program.

By way of additional background, in 2012 the city’s program to disconnect footing drains from the sanitary sewer system was suspended by the council in some areas of the city. Specifically, it was suspended in the Glen Leven and Morehead (Lansdowne neighborhood) areas. The program was allowed to continue in other geographic areas and as part of the city’s developer offset mitigation (DOM) program. The DOM requires owners of new developments to complete a certain number of FDDs to offset the additional flow in the sanitary system caused by new construction.

The CDM contract drew scrutiny at the May 5 meeting because the city is currently undertaking a sanitary sewer wet weather evaluation (SSWWE) study. It’s supposed to yield a recommendation about whether to continue with the FDD program, and if so, in what form. In addition, the city’s ordinance – which requires property owners to undertake FDDs – was challenged in a lawsuit filed earlier this year. That case is pending as the city first removed the case from state to federal court. But the result of a May 28 hearing before a federal judge will be to return the case to the Washtenaw County 22nd circuit court.

The previous three iterations of the CDM contract totaled  about $3.6 million. The money for these contracts is drawn from the city’s sewer fund.

The proposed contract extension drew criticism during public commentary on May 5 from Frank Burdick, a Ward 4 resident who urged the council to reject it. Council deliberations on this item were included as part of The Chronicle’s live updates from the May 5 meeting.

Since the FDD program’s start in 2001, about 1,834 footing drains have been disconnected through the city program and 848 footing drains have been disconnected through the developer offset mitigation program.

Animation of contrast between the pre-FDD configuration and the post-FDD configuration. (Original illustration from screenshot of Youtube video by Milwaukee Metropolitan Sewerage District, modified by The Chronicle.)

Animation of contrast between the pre-FDD configuration and the post-FDD configuration. (Original illustration from screenshots of YouTube video by Milwaukee Metropolitan Sewerage District, modified by The Chronicle.)

Urban Forest

The city’s first comprehensive plan for managing Ann Arbor’s urban forest will be considered at the council’s June 2 meeting. The Ann Arbor park advisory commission recommended adoption of the plan at its meeting on April 15, 2014. [.pdf of Urban & Community Forest Management Plan]

An urban forest is defined as all the trees, shrubs and woody vegetation growing along city streets, in public parks and on institutional and private property. In Ann Arbor, about 25% is on public property, with 75% on private property. Based on a U.S. Dept. of Agriculture Forest Service i-Tree Eco Analysis done in 2012, Ann Arbor’s urban forest has an estimated 1.45 million trees. It creates a 33% tree canopy – the layer of leaves, branches and stems of trees that cover the ground when viewed from above.

The city manages 43,240 street trees and about 6,900 park trees in mowed areas. A tree inventory conducted in 2009 didn’t include natural areas, she noted, so there are thousands of trees that aren’t counted. The urban forest includes over 200 species, representing 82 genera.

Map of selected tree variety by The Chronicle from city of Ann Arbor 2009 survey.

Map of selected tree variety by The Chronicle from city of Ann Arbor 2009 survey. Image links to dynamic map hosted on geocommons.com

PAC had been briefed on the 135-page Urban & Community Forest Management Plan at its Feb. 25, 2014 meeting by Kerry Gray, the city’s urban forest & natural resources planning coordinator. The management plan includes 17 recommendations, listed in priority based on community feedback for implementation. Each of the 17 recommendations includes action tasks and implementation ideas, case studies, and resources that are needed, including funding. The recommendations are:

  1. Implement proactive tree maintenance program.
  2. Strengthen tree planting and young tree maintenance programs.
  3. Monitor threats to the urban and community forest.
  4. Increase landmark/special tree protections.
  5. Secure adequate city‐funding for urban forestry core services.
  6. Develop street tree master plans.
  7. Pursue grant and philanthropic funding opportunities.
  8. Strengthen forestry related ordinances.
  9. Update tree inventory and canopy analysis.
  10. Develop urban forest best management practices.
  11. Increase urban forestry volunteerism.
  12. Strengthen relationships with outside entities who impact trees.
  13. Implement community outreach program.
  14. Obtain the best use of wood from removed trees.
  15. Create city staff working groups to coordinate projects that impact trees.
  16. Engage the city’s Environmental Commission in urban and community forestry issues.
  17. Review the urban forest management plan periodically and update as needed.

City Hall Reskinning

At its June 2 meeting, the council will consider a proposal to recommend to the planning commission that the capital improvements plan (CIP) for FY 2017 and FY 2018 be revised to remove the $4.4 million that is included for a city hall reskinning project. The planning commission is the body that approves the CIP. But the council has budgetary discretion to fund projects in the CIP or not – so the resolution in some sense calls on the planning commission to take an action it does not have the authority to execute. This was a point made during deliberations at the council’s May 19, 2014 meeting when the item was postponed.

According to a staff memo written in response to a councilmember question, reskinning of the Larcom City Hall building would mean replacing the existing exterior walls and windows of the building. The result would be new squared-off exterior, eliminating the inverted pyramid design. The new exterior would hang vertically from the sixth floor.

The focus of the project is on improving energy efficiency. The memo describes existing windows as mostly single-pane glass on aluminum frames, which offer little insulation value. The project would also result in an incremental gain in square footage – because the lower floors would have the same footprint as the sixth floor, which is currently the largest floor of the building. The materials used for the exterior would “blend better” with the recently constructed Justice Center, which adjoins city hall.

Library Lot Sale Proceeds

On June 2 the city council will consider a resolution setting a policy for distribution of the proceeds from the sale of development rights on the Library Lot. The proposed policy would set aside 50% of the net proceeds to the city’s affordable housing trust fund.

The council has already directed the city administrator to hire a real estate broker to explore selling the rights to develop the site – above the Library Lane underground parking structure, which was completed in 2012.

The item was postponed at the council’s April 7, 2014 meeting. The vote was 6-5 to postpone, with dissent from Sabra Briere (Ward 1), Christopher Taylor (Ward 3), Margie Teall (Ward 4), Chuck Warpehoski (Ward 5), and mayor John Hieftje.

State Street Transportation Corridor Study

The June 2 agenda includes a resolution for a $299,911 contract with Parsons Brinckerhoff Michigan Inc. to conduct a study of the South State Street transportation corridor. The 1.3 mile long area of the study extends from the intersection of Ellsworth Road and South State Street north to the intersection of Oakbrook Drive and South State Street. The money to pay for the study will be drawn in equal parts from the current fiscal year and next year’s general capital fund budget. The study will take a year, starting in June 2014.

The goal of the study is focused on transportation needs in the corridor and to provide base conceptual engineering plans for the redesign of the corridor – possibly including a boulevard “Complete Street” design. The redesign would be intended to “address all modes of travel; enhance vehicle flow; improve safety; create an aesthetically pleasing entrance to the City; and, utilize sustainable concepts such as low impact design (‘LID’), and low energy use lighting.”

The study of the area as a transportation corridor comes not long after a recently completed South State Street corridor plan, adopted by the city council into the city’s master plan at its July 15, 2014 meeting. That corridor plan established planning objectives for the land use along the corridor.

Besides Parsons Brinckerhoff, the other bidder for the work was DLZ.

Stone School Road Sidewalk Special Assessment

As part of a road reconstruction project for Stone School Road, the city is planning to install a sidewalk on the west side of the road. To fund the sidewalk construction, part of the cost will come from a special assessment of property owners. The extent of the project on Stone School Road runs from I-94 to Ellsworth Road. Construction is planned for the project during the 2014 and 2015 construction seasons.

The project is being funded in part through a federal surface transportation grant, which can pay about 80% of construction costs, but not engineering, testing or inspection costs. The total project cost is roughly $128,500, of which about $55,000 will be special assessed.

The council will be asked to approve a resolution directing the city assessor to set the roll of properties to be assessed.

Rezoning: Housing Commission Properties

At its June 2 meeting, the city council will consider giving initial approval to the rezoning of three Ann Arbor Housing Commission properties. The planning commission had recommended the rezoning at its May 6, 2014 meeting. The current PL (public land) zoning for some of the properties is a vestige of the AAHC properties’ status as city-owned land. The city council approved the transfer of deeds to the AAHC at its June 2, 2013 meeting. The three sites to be considered on June 2 are part of the housing commission’s major initiative to upgrade the city’s public housing units by seeking private investors through low-income housing tax credits.

Rezoning is recommended for the following public housing sites, two of which are currently zoned as public land:

  • Baker Commons: Rezone public land to D2 (downtown interface). The 0.94-acre lot is located at 106 Packard Street, at the intersection with South Main, in Ward 5. It includes a 64-unit apartment building.
  • Green/Baxter Court Apartments: Rezone public land to R4A (multi-family dwelling district). The 2-acre site is located at 1701-1747 Green Road and contains 23 apartments in four buildings and a community center. It’s in Ward 2.
  • Maple Meadows: Currently zoned R1C (single-family dwelling district), the recommendation is to rezone it as R4B (multi-family dwelling district). The site is 3.4 acres at 800-890 South Maple Road and contains 29 apartments in five buildings and a community center. It’s located in Ward 5.

At the planning commission’s May 6 meeting, AAHC director Jennifer Hall explained that PL zoning doesn’t allow housing to be built on it. As AAHC seeks private funding to rehab its properties, it needs to ensure if a building burns down, for example, it could be rebuilt. In general that’s why the rezoning is being requested. It’s also being requested to align the zoning with the current uses of the property. She stressed that the highest priority properties to be rezoned are Baker Commons, Green/Baxter and Maple Meadows, because investors have already been found to renovate those sites.

For these three sites, planning commissioners also voted to waive the area plan requirements for the AAHC rezoning petitions, because no new construction is proposed and surveys of the improvements have been provided.

For additional background on the AAHC process of renovating its properties, see Chronicle coverage: “Public Housing Conversion Takes Next Step.”

Delta Gamma Site Plan, Rezoning

The city council will be asked on June 2 to give final approval of a rezoning request for 515 Oxford, to convert a house for use as an annex to the Delta Gamma sorority. The main sorority house is located nearby at 626 Oxford. The council gave initial approval to the rezoning at its May 5, 2014 meeting. Also on the June 2 agenda is consideration of the site plan approval for the same project. The site plan was recommended for approval by planning commissioners on April 15, 2014.

Delta Gamma, Ann Arbor planning commission, The Ann Arbor Chronicle

Aerial view showing the location of 515 Oxford, south of Geddes and at the eastern end of South University.

The rezoning request, recommended by the planning commission on Jan. 23, 2014, is to rezone the parcel from R4A (multi-family dwelling) to R2B (two-family dwelling and student housing). Most of the surrounding parcels are zoned R2B, although the site immediately to the north is also zoned R4A. Also nearby is public land (PL) where the University of Michigan’s Oxford Houses complex is located.

The two-story house at 515 Oxford includes two one-story wings. It is currently a rental property with three units – a studio apartment, one-bedroom apartment, and four-bedroom apartment – and a maximum occupancy of 8 people. One of the units is in a former garage.

The proposal for a renovation would accommodate a maximum of 20 residents, including a required resident manager.

The building is notable because it was originally designed in 1940 by architect George Brigham, who used it as his home and architectural studio. He designed over 40 houses in Ann Arbor, including many in Arbor Hills and Barton Hills between 1936 and 1958.

Drive-Thru Ordinance: Final Approval

On the city council’s June 2 agenda is final approval of amendments to Ann Arbor’s zoning ordinance related to drive-thrus. Initial approval came at the council’s May 5 meeting. The amendments would add a definition of a “drive-thru facility” to Chapter 55 of the city code. Currently, the term used throughout the code is “drive-in,” which is not explicitly defined in the code.

The proposed revisions define a drive-thru in this way: “Any building or structure, or portion thereof, that is constructed or operated for the purpose of providing goods or services to customers who remain in their vehicle during the course of the transaction.” The revisions also clarify that a drive-thru is an accessory use, not the principle use of the building. A project in which a drive-thru would be the principle use would not be allowed. Basic layout requirements would also be added to the ordinance.

In addition, the changes would require drive-thrus to obtain special exception use permits, which would be allowed only in the O (office), C2B (business service) and C3 (fringe commercial) zoning districts. Drive-thrus would not be allowed in the C1, D1, D2, and other commercial districts.

Currently, drive-thrus are allowed in C3 districts without a special exception use. They are allowed as special exception uses in the C2B district.

When considering whether to grant a special exception use – which does not require additional city council approval – the planning commission considers these issues:

1. Is the location, size and character of the proposed use compatible with the principal uses of the district and adjacent districts? Is it consistent with the Master Plan? Is it consistent with the surrounding area? Will it have any detrimental effects to the use or value of surrounding area, or the natural environment?

2. Is the location, size, character, layout, access and traffic generated by the use hazardous or inconvenient or conflicting with the normal traffic of the neighborhood? Is off-street parking safe for pedestrians? Do the necessary vehicular turning movements block normal traffic flow? Are any additional public services or facilities needed by the use, and will they be detrimental to the community?

3. Is the maximum density and minimum required open space at least equal to the standards normally required by the Zoning Ordinance for the district?

The planning commission recommended the changes at its April 1, 2014 meeting.

The proposed amendments were first reviewed by the commission’s ordinance revisions committee in 2007, but never moved forward to the full commission for consideration. The ORC most recently reviewed these changes in March of 2014. [.pdf of staff memo and proposed amendments]

Ruth’s Chris Site Plan

The site plan for a new Ruth’s Chris Steak House on Fourth Avenue in downtown Ann Arbor is on the June 2 agenda for consideration. The planning commission recommended approval at its April 1, 2014 meeting.

 Ruth's Chris Steak House, Ann Arbor planning commission, The Ann Arbor Chronicle

Proposed facade of Ruth’s Chris Steak House at 314 S. Fourth Ave.

The site plan calls for renovating the single-story building at 314 S. Fourth Ave. and putting up a 1,943-square-foot second-floor mezzanine addition over the front part of the existing building. The current structure is 8,024 square feet, and most recently housed the Dream Nite Club, which closed in 2012. The project is estimated to cost $2.2 million. [.pdf of staff report on Ruth's Chris site plan]

Part of the planning commission’s discussion focused on whether there might be outdoor dining in front of the restaurant. The project’s architect indicated that at this point, outdoor seating wouldn’t be appropriate, in part because of bus traffic. The building is located near the Blake Transit Center, a hub for public transportation. The architect also indicated that the restaurant will be using valet parking, with valets positioned in front of the building.

This would be the first Ruth’s Chris Steak House in Ann Arbor. The chain is based in Florida, with locations nationwide.

Utility Rates

The council will consider giving final approval to higher utility rates – for water, sewer and stormwater. Initial approval came at the council’s May 19 meeting.

Water rates will increase across all tiers of consumption. For the first 7 “units” of water, the charge is will increase from $1.35 to $1.40. For the next 21 units, the charge is proposed to increase from $2.85 to $2.96 per unit. And for the 17 units after that, the increase is proposed to be from $4.88 to $5.08. A unit is 100 cubic feet, which is 748 gallons.

Sewer rates will increase from $3.65 to $3.85 per unit. And stormwater fees would increase for all tiers of impervious service. For the middle tier – for more than 2,187 square feet but less than or equal to 4,175 square feet – on a quarterly basis, the increase would be from $24.85 to $26.32.

According to the staff memo accompanying this agenda item, the recommended rate changes in water, sewer, and stormwater would increase revenues to the water, sewer, and stormwater funds by $765,119, $1,171,931 and $410,235 respectively. The reason given for the rate increases is to cover maintenance and debt payments, and to maintain funding for capital improvement requirements. The city calculates the impact to be an additional $6.25 per quarter or $24.98 per year for an average consumer, which is a net increase of 4.2%.

Water consumption for a typical single family is assumed at 19 units per quarter.

History of city of Ann Arbor water rates. The city converted to a tiered system 10 years ago in 2004, based on usage. The 2015 amount is proposed.

History of city of Ann Arbor water rates. The city converted to a tiered system 10 years ago in 2004, based on usage. The 2015 amount is proposed.

Grant to Farmers Market for Food Stamp Recipients

At its June 2 meeting, the city council will consider approval of an agreement with the Fair Food Network to continue administering the Double Up Food Bucks program at the Ann Arbor farmer’s market. Approval would entail acceptance of $32,000 in funding.

The Double Up name stems from the fact that it provides a match of up to $20/person/day for people using SNAP (Bridge cards/EBT/food stamps) to purchase Michigan-grown produce at farmers markets in Michigan.

The city of Ann Arbor has received Double Up Food Bucks grant funding since 2010.

Partnership with Community Action Network

A proposal for a five-year partnership with the nonprofit Community Action Network is on the June 2 agenda. The partnership was recommended for approval by the Ann Arbor park advisory commission at its May 20, 2014 meeting.

The agreement would be for CAN to continue operating the city’s Bryant and Northside community centers, which the nonprofit has been managing since 2008. The proposed amount is not to exceed $130,000 annually – an increase of $25,000 from the current agreement. The higher amount is included in the FY 2015 general fund budget for parks and recreation that the city council approved on May 19. According to a staff memo, the higher amount will address increases in fixed costs and “assist in retaining quality staff that is at the core of the services that CAN provides.” [.pdf of staff memo]

The staff memo also noted that a request for proposals (RFP) was not issued for this work, because CAN has been the sole respondent to the previous two RFPs and the city is satisfied with its work.

During the May 20 PAC meeting, CAN received praise for their work from several commissioners and Colin Smith, the city’s parks and recreation manager. CAN executive director Joan Doughty and deputy director Derrick Miller were on hand to answer questions. Part of the discussion focused on CAN’s exemption from the city’s living wage requirement, which the city council granted in 2012 for a three-year period through Nov. 8, 2015. Doughty noted that the exemption was sought in part because CAN was paying a living wage to part-time employees who were high school or university students, which limited the nonprofit from paying higher wages to full-time workers. She also pointed out that the city parks and recreation unit isn’t required to pay the living wage to its seasonal workers.

LDFA Extension

On the council’s June 2 agenda is an item that would express city council support of the local development finance authority’s application to the Michigan Economic Development Corp. to extend the life of the tax capture arrangement for up to 15 years. Without an extension, the LDFA would end in 2018.

Ann Arbor’s local development finance authority is funded through a tax increment finance (TIF) district, as a “certified technology park” described under Act 281 of 1986. The Michigan Economic Development Corp. (MEDC) solicited proposals for that designation back in 2000. The Ann Arbor/Ypsilanti “technology park” is one of 11 across the state of Michigan, which are branded by the MEDC as “SmartZones.”

The geography of the LDFA’s TIF district – in which taxes are captured from another taxing jurisdiction – is the union of the TIF districts for the Ann Arbor and the Ypsilanti downtown development authorities (DDAs). It’s worth noting that the Ypsilanti portion of the LDFA’s TIF district does not generate any actual tax capture.

The LDFA captures Ann Arbor Public Schools (AAPS) operating millage, but those captured taxes don’t diminish the school’s budget. That’s because in Michigan, local schools levy a millage, but the proceeds are not used directly by local districts. Rather, proceeds are first forwarded to the state of Michigan’s School Aid Fund, for redistribution among school districts statewide. That redistribution is based on a per-pupil formula as determined on a specified “count day.” And the state reimburses the School Aid Fund for the taxes captured by SmartZones throughout the state.

In FY 2013, the total amount captured by the LDFA was $1,546,577, and the current fiscal year forecast is for $2,017,835. About the same amount is forecast for FY 2015.

The extension of the LDFA is made possible by Public Act 290 of 2012, which amended the Local Development Financing Act to allow a SmartZone to capture school taxes for an additional five years or an additional 15 years. The staff memo accompanying the resolution describes the five-year extension as possible “upon approval of the MEDC President and the State Treasurer, if the Ann Arbor/Ypsilanti SmartZone LDFA agrees to additional reporting requirements and the LDFA requests, and the city councils of Ann Arbor and Ypsilanti approve, the amendment of the LDFA tax increment financing (TIF) plan to include regional collaboration.”

A 15-year extension is possible, according to the memo, “if, in addition to the above requirements, Ann Arbor and Ypsilanti, as the municipalities that created the SmartZone, enter into an agreement with another LDFA [a "Satellite SmartZone"] that did not contain a certified technology park to designate a distinct geographic area, as allowed under Section 12b of the Act…”

The council’s resolution states that if the MEDC approves the extension, the city of Ann Arbor will work with the LDFA and the city of Ypsilanti to identify another LDFA – called the “Satellite SmartZone LDFA.” The arrangement will allow the Satellite SmartZone LDFA to capture local taxes in its own distinct geographic area for the maximum 15 years allowed by statute.

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