Stories indexed with the term ‘tax increment finance’

County Takes Action on Budget, Tax Levies

Washtenaw County board of commissioners meeting (Aug. 6, 2014): County commissioners took initial votes to levy two taxes that would generate revenues for economic development, agricultural projects, and support of indigent veterans.

Washtenaw County board of commissioners, The Ann Arbor Chronicle

Chris Haslinger (second from right), director of training for the United Association (UA) of plumbers and pipefitters, received a proclamation from the county board of commissioners at the board’s Aug. 6 meeting. They were gathering for a photo to mark the event. From left: Conan Smith, Andy LaBarre, Alicia Ping, Yousef Rabhi, Chris Haslinger, and Verna McDaniel, the county administrator. (Photos by the writer.)

The county has determined that it’s authorized to collect up to 1/10th of a mill for support of indigent veterans, without seeking voter approval. That’s because the state legislation that enables the county to levy this type of tax – the Veterans Relief Fund Act, Public Act 214 of 1899 – predates the state’s Headlee Amendment. The county first began levying this millage in 2008, and collects the tax in December. The current proposal is to levy 1/27th of a mill in December 2014, which is expected to raise about $540,887 in revenues for use in 2015.

The county’s position is that Act 88 can also be levied without voter approval to fund economic development and agricultural activities. This year, the proposal is to levy 0.07 mills in December 2014 – the same rate that was levied in 2013. It’s expected to raise an estimated $1,022,276 in property tax revenues.

Final action on these tax levies is expected at the board’s Sept. 3 meeting.

Also related to Act 88, the board approved allocations of $87,760 in Act 88 revenues that were collected in 2013, to support six projects. Four of the projects are administrated by Ypsilanti-based Growing Hope, with the remaining two projects initiated by the Michigan State University Product Center.

During the Aug. 6 meeting, commissioners approved amendments to both the Act 88 projects resolution and the resolution to levy the tax this year. The amendments directed the county’s corporation counsel to provide a written opinion about how Act 88 revenues can lawfully be used, and how the tax can be lawfully levied without a vote of the people. The amendments were brought forward by Dan Smith (R-District 2).

In other action, the board received a second-quarter budget update, with projections showing a general fund surplus of $211,920 for the year. The board also made mid-year budget adjustments, which included allocating a $3.9 million surplus from 2013 into unearmarked reserves.

Commissioners approved a new policy to guide decisions on tax increment finance (TIF) proposals, and supported revised rules and guidelines from the water resources commissioner. Those revisions relate to procedures and design criteria for stormwater management systems.

A proclamation made during the Aug. 6 meeting honored Herb Ellis Sr., the first black man to be elected to the Washtenaw County board of commissioners. Ellis was elected in 1968 and served until 1982, representing Ann Arbor. During that time he also was the first black chair of the county board. He passed away on July 10, 2014 at the age of 98.

Another resolution recognized the contributions of United Association (UA), a union of plumbers, pipefitters, sprinkler fitters, welders, and heating, ventilation, air conditioning and refrigeration (HVACR) technicians. They’re in this area from Aug. 9-15 for their 61st annual training program, and have announced a new 15-year agreement to continue the program at the Washtenaw Community College.

The Aug. 6 meeting was held one day after the Aug. 5 primary elections. At the start of the meeting, board chair Yousef Rabhi congratulated all primary candidates, and said he looked forward to working with Ruth Ann Jamnick, the winner of the District 5 Democratic primary. He quickly added “pending the general election, but I think…” – a comment that drew laughs. District 5 – which covers August Township and parts of Ypsilanti Township – is heavily Democratic. Jamnick, who prevailed in the four-way Democratic primary, will face Republican Timothy King in the Nov. 4 general election. District 5 was the only race that was contested for the county board, with incumbent Rolland Sizemore Jr. not seeking re-election. Incumbents in all other districts of the nine-member board were unchallenged in the primary.

At the end of the meeting, the board voted to enter into a closed executive session for the purpose of reviewing attorney-client privileged communication. It is one of the exemptions allowed under the Michigan Open Meetings Act.

After about 30 minutes, three commissioners returned to the boardroom – Dan Smith (R-District 2), Alicia Ping (R-District 3) and Conan Smith (D-District 9). They indicated to The Chronicle that they thought the discussion in the closed session had strayed away from the limits imposed by the OMA, and they had left the session because of that. They did not state what the nature of the discussion had been, nor the topic of the session.

Soon after, the remainder of the board emerged from the closed session, and the meeting was adjourned. [Full Story]

County TIF Policy Gets Initial Approval

The Washtenaw County board of commissioners has given initial approval a policy to guide the county’s participation in tax increment financing (TIF) authorities. The action took place at the board’s Aug. 6, 2014 meeting.

At its Oct. 16, 2013 meeting, the board had passed a resolution directing county administrator Verna McDaniel to develop a policy for evaluating future TIF proposals. The resolution stated that the policy would be developed with input from staff of the office of community and economic development, the equalization department, and the brownfield redevelopment authority. The Oct. 16 resolution was passed over dissent by the board’s two Republican commissioners, Dan Smith (R-District 2) and Alicia Ping (R-District 3).

Subsequently, an advisory committee was formed to help develop the … [Full Story]

Ann Arbor LDFA Looks to Extend Its Life

Ann Arbor Local Development Finance Authority board meeting (June 17, 2014): The LDFA board’s meeting convened around 8:20 a.m. – about seven hours after the city council’s meeting adjourned the previous evening. And the council’s meeting was the topic of small talk among LDFA board members as they waited for their meeting to convene.

Carrie Leahy is chair of the LDFA board.

Carrie Leahy is chair of the LDFA board.

The council’s meeting was of more than just passing interest to the LDFA board members – because the council voted at that meeting to table a $75,000 contract for business development services with Ann Arbor SPARK, a local nonprofit economic development agency. Ann Arbor SPARK is also the LDFA’s contractor – but not for the same kind of services that SPARK delivers under its contract with the city. The council will likely take up its contract with SPARK again at a future meeting, possibly as soon as July 7.

The city’s annual contract with SPARK, which is paid for with general fund money, is meant to cover the attraction and retention of mature companies to the Ann Arbor area. In contrast, the LDFA contracts with SPARK for entrepreneurial support services – for companies that are in some phase of starting up.

On the LDFA board’s June 17 agenda was the annual contract with Ann Arbor SPARK for entrepreneurial support services – which the board voted to approve. This year that contract is worth nearly $2 million – $1,891,000 to be exact.

An unsuccessful bid by councilmembers made during the city’s FY 2015 budget deliberations would have reduced the total LDFA expenditures by $165,379. The goal of that expenditure reduction would have been to increase the fund balance that was available for infrastructure improvements in the LDFA district – specifically, for high-speed telecommunications. At the LDFA’s June 17 meeting, city CFO Tom Crawford indicated that sometime in the FY 2015 fiscal year, the city would be making a proposal to install fiber throughout Ann Arbor.

The contract between the LDFA and SPARK covers a range of items, with the top two line items consisting of staffing for the business incubator ($420,000) and provision of services to start-up companies in Phase III of their development ($550,000). SPARK classifies its engagement with companies in terms of phases: preliminary screenings (Phase I); due diligence (Phase II); intensive advising (Phase III); and accelerating opportunities (Phase IV). [.pdf of FY 2015 budget line items] [.pdf of LDFA-SPARK FY 2015 contract]

At its June 17 meeting, the LDFA board also approved a routine annual $42,600 contract with the city of Ann Arbor – for administrative support services. Those include items like the preparation of meeting minutes, stewardship of public documents, and preparation of budgetary analyses. [.pdf of FY 2015 LDFA contract with city of Ann Arbor]

The final voting item for the board was approval of its meeting schedule for the next fiscal year. The LDFA board meets in eight out of 12 months, with the next meeting taking place on July 15, 2014, starting at 8:15 a.m. in the city council chambers. [.pdf of 2014-2015 meeting schedule]

These voting items did not, however, generate the majority of the board’s discussion at its June 17 meeting.

The board focused most of its discussion on issues surrounding its application for an extension of the LDFA past its current 15-year lifespan, which ends in 2018. Legislation passed in 2012 allowed for either a 5-year or a 15-year extension – with different criteria for those time periods. The 15-year extension requires an agreement with a satellite LDFA, with two communities currently under consideration to partner with Ann Arbor’s LDFA: Brighton and Adrian. Flint had also been a possibility, but is no longer on the table.

With an extension, the LDFA would continue to capture school operating millage money, which would otherwise go to the state’s School Aid Fund. At least some of the school taxes subject to capture by LDFAs statewide are required to be reimbursed to the School Aid Fund by the state. Questions about how that applies to Ann Arbor’s LDFA have been raised – and a review of the state statute appears to support the conclusion that the key clause requiring reimbursement is inapplicable to the Ann Arbor SmartZone LDFA. That understanding was confirmed to The Chronicle by the Michigan Dept. of Treasury communications staff in a telephone interview on June 23.

The exact nature of that tax capture arrangement and possible reimbursement was also the subject of LDFA board discussion on June 17 – because the LDFA board is being pressed by city councilmembers to account for how the LDFA tax capture impacts the state’s School Aid Fund. Board member Stephen Rapundalo expressed some frustration about that – based on his perception that this material had been well explained in the past: “What’s it take – for them to understand unambiguously how that works? I mean, we have told them. Why is the onus on the LDFA to have to show them that?”

Besides the tax capture mechanism, two other issues raised by city councilmembers are factoring into the LDFA board’s approach to seeking an extension of its term. Board chair Carrie Leahy told her colleagues that she took away two main messages from recent appearances in front of the Ann Arbor city council. Some councilmembers, she said, would like to see: (1) an independent audit of job creation numbers; and (2) a provision for infrastructure investments as part of an LDFA extension.

On the infrastructure side, the LDFA board’s discussion focused on the existing TIF (tax increment finance)/development plan, which provides for investments in high-speed telecommunications (fiber) networks, but not for projects like street construction, sewer construction and streetlight installation. The question was raised as to whether the LDFA could use its school tax capture to pay for a fiber network in the whole geographic district of the LDFA – or if school taxes could only be used to fund a fiber network to an business incubator.

The Ann Arbor LDFA’s district covers the geographic areas of the Ann Arbor and Ypsilanti downtown development authorities – although Ypsilanti’s DDA area does not generate any LDFA tax capture. As a consequence, money captured by the LDFA is not spent in the Ypsilanti portion of the district. But that could change under an extension of the LDFA – based on board discussion at the June 17 meeting.

On the job creation numbers audit, the June 17 board discussion indicated that the LDFA will now be looking possibly to incorporate a job numbers audit as part of an upcoming financial audit. The financial auditing firm will be asked to provide some explanation of how it might be able to incorporate a jobs audit as part of its scope of work for the upcoming financial audit. The board appears to understand that some type of jobs audit would be important for winning ultimate city council support for a 15-year extension of the LDFA.

The city council’s representative to the LDFA board, Sally Petersen, made that explicit more than once during the June 17 meeting, saying that “taking the lead on establishing an independent audit would go a long way towards getting city council support for an extension.”

The LDFA’s deliberations and other agenda items are reported in more detail below. [Full Story]

Ann Arbor DDA TIF: Capped

A change to Ann Arbor’s ordinance (Chapter 7) regulating the Ann Arbor Downtown Development Authority’s tax increment finance capture and its board governance has been given final approval by the city council. The action came at the council’s Nov. 18, 2013 meeting on a 9-2 vote. Dissent came from Christopher Taylor (Ward 3) and Margie Teall (Ward 4).

The version of the Chapter 7 ordinance change given final approval by the council would allow for several million dollars in additional TIF capture by the DDA, compared to a different version that had been tabled. The version in front of the council on Nov. 18 set a cap on DDA TIF revenue that will not apply at all until FY 2017 and … [Full Story]

Library View on DDA TIF Capture: Unchanged

At its most recent meeting on Sept. 16, 2013, the Ann Arbor city council again considered a revision to the ordinance regulating the tax increment finance (TIF) of the Ann Arbor Downtown Development Authority (DDA). The council had given initial approval to the Chapter 7 changes nearly six months ago, on April 1, 2013. But at the Sept 16 meeting, the council again postponed a final vote on the revisions, this time until Oct. 21.

Downtown location of the Ann Arbor District Library

Downtown location of the Ann Arbor District Library (Photo by the writer, Sept. 21, 2013)

Other taxing jurisdictions besides the city of Ann Arbor – entities that also have a portion of their levied taxes captured by the DDA – have something at stake.  Those units are Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. The topic of other taxing jurisdictions’ interest in the Chapter 7 revisions has been raised at three public meetings since late August: (1) at an Aug. 26 meeting of a joint city council and DDA board committee; (2) at the Sept. 15 city council Sunday night caucus; and (3) at the Sept. 16 city council meeting.

Some councilmembers have speculated about the current view held by one of the other taxing jurisdictions in particular – the Ann Arbor District Library. AADL director Josie Parker wrote a letter to mayor John Hieftje in January 2012 outlining the library’s position on the matter at the time, something that has been widely reported. The Chronicle only recently became aware that a similar letter had been sent by Parker to the Ann Arbor DDA in August 2011.

Those letters articulate a view that’s consistent with op-eds published in The Chronicle on the topic – that the DDA owes more in repayments to the taxing jurisdictions than the DDA agreed it needed to pay back in May 2011. Further, the AADL’s position, as expressed in the two letters from Parker, is to reject the DDA’s most recent and current interpretation of the city ordinance  – which was stated only after the DDA had already made repayments of excess TIF capture in 2011. Those repayments had been made to cover several prior years, because the required repayment had been “overlooked.”

The DDA’s subsequent interpretation was that the DDA did not owe the money it had returned in 2011. DDA officials maintain that as long as the DDA had debt obligations, it would also not owe any return of excess TIF to the other taxing jurisdictions in the future. Based on calculations by The Chronicle, the DDA’s current interpretation probably deprives AADL of roughly $55,000-$60,000 annually, compared to the kind of interpretation AADL gives the ordinance. That amount could increase, or decrease, in the future.

The position articulated in Parker’s August 2011 letter includes the statement: “The Library fully intends to enforce its rights for all past and future amounts owed to the Library as a result of excess TIF capture. However, the Library would prefer to resolve these issues without court involvement.”

Responding to a question in a telephone interview with The Chronicle on Sept. 19, 2013, Parker stated: “The position of the Ann Arbor District Library is still accurately reflected in those letters.”

That statement appears to resolve any uncertainty that might exist about the AADL’s current position. At the Sept. 15 Sunday night caucus, for example, Sabra Briere (Ward 1) had ventured that Parker’s letter to Hieftje might be appropriately regarded as a “snapshot in time” and might not reflect the AADL’s current position. And Christopher Taylor (Ward 3), during the Aug. 26 joint committee meeting, appeared to discount the current relevance of the letter to Hieftje by asking what year it had been sent.

However, about the AADL’s position on the DDA TIF capture taken in 2011, Parker stated this week: “It has not changed.” [Full Story]

Ann Arbor DDA Ordinance Delayed Until Oct. 21

Revisions to the city ordinance regulating the Ann Arbor Downtown Development Authority tax increment finance capture have again been postponed – until Oct. 21, 2013. The city council action to postpone came at its Sept. 16, 2013 meeting.

The city council and the DDA board have a joint committee that is working out details of an alternative to the ordinance amendments that have already been given initial approval by the council.

The initial DDA ordinance revisions that appeared on the council’s Sept. 16, 2013 agenda were awaiting a second and final vote by the council. The amendments to Chapter 7 included various changes to governance, including term limits for board members, as well as clarifications to the existing language on TIF capture. … [Full Story]

Column: DDA, City Council – No Politics Here

Back in the spring of 2011, the Ann Arbor city council and the Downtown Development Authority were arguing bitterly about money.

Guenzel Kunselman

(Left) Ward 3 city councilmember Stephen Kunselman. (Right) DDA board member Bob Guenzel.

Now two and a half years later, a solid working relationship between the two entities has evolved – unmarred by political machinations, based instead on a clearly understood shared past, and consensus interpretation of relevant statutes and local laws governing tax increment finance capture.

That has led to a joint working session between the entities scheduled for Sept. 9, 2013. The session will offer an opportunity for members of the organizations to exchange appreciation and praise for the positive turn the relationship has taken over the last 30 months.

Heh. That’s a joke, as is the headline – the only accurate part of the preceding two paragraphs is the fact that a Sept. 9 working session is scheduled.

And it’s fair to say that the working session between the two groups would probably not be taking place unless it were contractually obligated – under an agreement ratified in May of 2011. The DDA operates the city’s parking system under that contract. In addition to the convening of a joint working session every fall, the contract stipulates that 17% of the gross parking revenues are to be paid to the city.

Parking money is just one of the two revenue categories over which the city and the DDA have been bickering. The other is the DDA’s tax increment finance capture (TIF), which is regulated by Chapter 7 of the city code. With an initial approval of changes to Chapter 7 already approved by the council on April 1, 2013, a joint DDA-city council committee was tasked on July 1, 2013 with making a recommendation on Chapter 7 changes to the council.

DDA-council committee group

Aug. 26, 2013 meeting of the DDA-council committee, held in the basement of city hall.

Representing the council on the joint committee are Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Jane Lumm (Ward 2) and Sally Petersen (Ward 2). Representing the DDA are Sandi Smith, Roger Hewitt, Bob Guenzel and Joan Lowenstein.

Despite being tasked by council on July 1 to begin meeting immediately, the committee did not meet until eight weeks later, on Aug. 26 – after the Aug. 6 city council primaries. Here’s the political calculus: If Kunselman had lost the Ward 3 Democratic primary to Julie Grand, the balance of votes on the council might have shifted to clarifying Chapter 7 in the DDA’s favor.

Grand ran a campaign that was generally supportive of the DDA. But Kunselman has led the council’s effort to clarify Chapter 7 in a way that favors the city as well as the other taxing jurisdictions whose taxes are captured by the DDA. However, Kunselman prevailed – as did Ward 4 challenger Jack Eaton, who campaigned in part on the idea of limiting the DDA’s TIF capture through clarification of Chapter 7.

Because the committee waited until after the Aug. 6 primary to meet, the DDA members had a clearer idea on Aug. 26 about who they’d be dealing with in the near future. The outcome of the Aug. 6 primary meant that Kunselman brought a certain amount of confidence to the committee meeting on Aug. 26. At one point he stated: “… I don’t really have a lot of trust out in my neighborhoods about what the DDA does downtown, ok? And that’s how I have been able to galvanize my base, so to speak, to stay here and to keep this effort alive, so that we can get this ordinance changed … Some of that money, yes, should be returned to the taxing authorities.”

Now the only question mark on the committee is the independent Lumm, who faces a challenge from Democrat Kirk Westphal in the November election. Lumm has made it clear she supports a Chapter 7 revision that respects the interests of the other taxing jurisdictions. But Lumm’s re-election is not a foregone conclusion.

That’s why the opening gambit from the DDA’s side at the Aug. 26 meeting was to delay further, even though the council is scheduled to take a final vote on the Chapter 7 revisions at its Sept. 16 meeting. A future council that included Westphal, mayor John Hieftje, Chuck Warpehoski (Ward 5), Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Sabra Briere (Ward 1) might have six votes that potentially could support the current approach to TIF calculations. But among those six, I think even Westphal, Warpehoski and Briere are capable of independent and rational thought on the question of TIF capture.

The delaying tactic on Aug. 26 emerges in a fairly obvious way if you read through the meeting transcript. [.pdf of 40-page transcript]. DDA members were more inclined to want to talk about general arguments for the existence of a DDA, professing uncertainty about why they’d even been invited to the table. Kunselman, Lumm and Petersen made it clear they were there to talk about clarifying the TIF calculations, not more general themes. It wasn’t clear whose interests Taylor was upholding, but he aligned himself policy-wise – as well as socio-linguistically – more with other DDA board members than with his city council colleagues.

The Aug. 26 meeting was highlighted by a number of misstatements or incomplete statements of historical fact – some serious enough that I worry about the ability of some of those at the table that day to effectuate good public policy.

Still, I think the meeting offered a glimmer of hope – from a guy whose history with the city of Ann Arbor is approaching an anniversary. On Sept. 15, city administrator Steve Powers will have been on the job exactly two years.

Powers, I think, offers a contrast with the previous city administrator Roger Fraser. On April 16, 2010 Fraser barred me from a meeting of a “working group” of councilmembers and DDA board members. Shielded from public view, the group was sorting out the terms of a new parking agreement. Powers, on the other hand, toward the end of the Aug. 26, 2013 committee meeting, had this to say: “If the committee is done commenting, you should provide for public comment, as it’s a public meeting.”

This column includes a brief outline of some factual points worth remembering – because they were misstated or incompletely stated at the Aug. 26 meeting. But first, a point about words.  [Full Story]

Ann Arbor Council Punts on DDA Issue

A final vote on a revision to the Ann Arbor city code regulating the Ann Arbor Downtown Development Authority’s tax increment finance (TIF) as been postponed again – until Sept. 16.  The postponing action was taken by the city council at its Sept. 3, 2013 meeting. At stake is around $1 million or more a year in tax revenue.

Ann Arbor DDA TIF Revenue projections Ann Arbor DDA TIF revenue projections. The vertical line indicates the year when the clarified calculations would be implemented. The red line is the amount of TIF revenue assumed by the DDA in its FY 2014 and FY 2015 … [Full Story]

Sandi Smith Takes DDA Baton from Gunn

Sandi Smith has been elected chair of the Ann Arbor Downtown Development Authority board for the current fiscal year, which began July 1. The board took the action at its annual meeting, which followed its regular monthly board meeting on July 3, 2013. Smith’s election as chair followed the board’s custom of electing its vice chair to the position of chair for the next year.

Other board officers elected included John Mouat as vice chair, Keith Orr as secretary, and Roger Hewitt as treasurer.

One of Smith’s first challenges leading the board will be to resolve an outstanding issue over the way the DDA administers Chapter 7 of the city code of Ann Arbor – which regulates the DDA’s tax increment finance … [Full Story]

DDA-City Committee Established

The Ann Arbor city council has established a four-member committee to sort through issues between the city and the Ann Arbor Downtown Development Authority. The council action came at its July 1, 2013 meeting. The DDA board is expected to establish counterparts at its July 3 monthly meeting.

The council will be represented by Christopher Taylor (Ward 3), Sally Petersen (Ward 2),  Stephen Kunselman (Ward 3) and Jane Lumm (Ward 2). Lumm’s name was added to the mix during the council’s meeting.

The current source of friction between the DDA and the city concerns the interpretation of Chapter 7 of the city code, which regulates the DDA’s tax increment finance (TIF) capture. The DDA has chosen to interpret the Chapter 7 language … [Full Story]

Council Postpones Final DDA Vote

On a unanimous vote taken at about 3 a.m., the Ann Arbor city council decided to postpone all remaining action items on its agenda until its May 6 meeting, including revisions to the city’s ordinance governing the Downtown Development Authority.

The council was in the middle of deliberations on the DDA ordinance when Chuck Warpehoski (Ward 5) suggested that it would be appropriate to adjourn the meeting, given the late hour. The politics of the issue had become heated. And two councilmembers who had supported the ordinance revisions at first reading had needed to leave the meeting before it ended – Marcia Higgins (Ward 4) and Sumi Kailasapathy (Ward 1).

Early in the meeting, Stephen Kunselman (Ward 3) had indicated he’d be … [Full Story]

Deliberations on DDA Pave Way for Final Vote

Ann Arbor city council meeting (April 1, 2013): The council’s first meeting in April featured some progress on items that have appeared repeatedly on its agenda in the last several weeks.

From left: Jane Lumm (Ward 2), assistant city attorney Mary Fales and Stephen Kunselman (Ward 3).

From left: Jane Lumm (Ward 2), assistant city attorney Mary Fales and Stephen Kunselman (Ward 3). (Photos by the writer.)

After two postponements, the council gave initial approval to a set of changes to the ordinance that establishes the Ann Arbor Downtown Development Authority (DDA). The changes can be divided into those that affect board composition and those that relate to the computation of the DDA’s tax increment finance (TIF) capture.

The tax calculations have implications of roughly $1 million a year for the DDA and the taxing jurisdictions whose taxes are captured by the DDA. Those taxing jurisdictions include the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. The vote was 7-3, as mayor John Hieftje, Margie Teall (Ward 4) and Chuck Warpehoski (Ward 5) voted no. Christopher Taylor (Ward 3) was absent. The final vote will likely come at the council’s April 15 meeting. Councilmembers are not obligated to vote the same way the second time around.

The council also wrapped up an issue that has appeared on its agenda for several meetings. At its March 18 meeting, the council had finally decided not to enact a moratorium on site plan applications in D1 (downtown core) zoning districts. Instead, the council had directed the planning commission to conduct a review of D1 zoning. But councilmembers had left open the question of the exact scope of work and the timeframe for its completion by planning commissioners. At the April 1 meeting, the council allowed the commission six months, until Oct. 1, to review the following: the appropriateness of D1 zoning on the north side of Huron Street between Division and South State and the south side of William Street between South Main and Fourth Avenue; the residential premiums; the zoning for the University of Michigan Credit Union parking lot.

Other business was further delayed by the council. At the developer’s request, the council postponed for a second time the 413 E. Huron project, a proposed 14-story, 216-apartment building at the northeast corner of Huron and Division streets. That project will come back before the council at its April 15 meeting. A new public hearing on the 413 E. Huron site plan application was started on April 1 and will continue on April 15.

The council also postponed a second and final vote on changes to the city’s sign ordinance. The changes would prohibit any new billboards, and allow only a limited range of digital signs. That won’t come back before the council until May 6. Several people addressed the council during the public hearing. All of them worked for Adams Outdoor Advertising, and spoke in opposition to the changes. Because of the postponement, the council extended a moratorium on digital sign applications, which has now been in place for a year.

The council also extended a moratorium on spending of monies that have been set aside under the city’s Percent for Art ordinance. A revision to that ordinance, which would likely eliminate the public art set-aside but still allow for aesthetic elements to be built into a project, is expected to be brought forward in the next few weeks. The public art ordinance revisions are being crafted by a council committee that was tasked with that responsibility in December of 2012.

At its April 1 meeting, the council also approved contracts for renovations at the Gallup Park canoe livery, and the Argo and Geddes dams. In addition, the council approved a lease for additional parking in connection with the Argo Cascades.

Other business at the meeting included council approval of the notice to issue bonds for the city’s drinking water system. The council also authorized contracts in connection with street reconstruction and sidewalk repair work for the 2013 season. [Full Story]

DDA Ramps Up PR After First Council Vote

Ann Arbor Downtown Development Authority board meeting (April 3, 2013): The board had no voting business on its agenda, but still dealt with serious business: the city council’s initial approval of changes to the DDA ordinance. The changes are meant to clarify the authority’s tax increment finance (TIF) capture, as well as place restrictions on board composition. [.pdf of Chapter 7 amendments]

DDA board chair Leah Gunn

DDA board chair Leah Gunn at the April 3, 2013 board meeting. (Photos by the writer.)

The proposed amendments to Chapter 7 of the city code, given initial approval at the council’s April 1, 2013 meeting, would reduce the DDA’s TIF capture by roughly $931,000 for FY 2014 – compared to the amount the DDA would receive based on the DDA’s current interpretation of the ordinance. But in adopting its two-year budget recently, DDA did not factor in recent building projects in the downtown – which add to the increment on which the DDA can capture taxes, starting in FY 2014.

So compared to the amount of TIF revenue in the DDA’s adopted FY 2014 budget, the clarified calculations would result in only about $363,000 less TIF revenue for the DDA. And compared to the DDA’s adopted FY 2015 budget, the clarified calculations would result in about $74,000 less revenue than budgeted. The clarified calculations would result in TIF revenue to the DDA in FY 2014 and FY 2015 of $3.570 and $3.682 million, respectively.

A dispute on the clarity of the existing Chapter 7 language had emerged in May 2011 just as the DDA and the city were poised to sign a newly renegotiated agreement under which the DDA manages the public parking system. At that time, the city’s financial staff reportedly first noticed the implications of an existing Chapter 7 paragraph that appears to place a cap on the DDA’s TIF capture – a cap that’s calibrated to projections in the DDA’s TIF plan. The TIF cap rises each year based on forecast growth in the DDA’s TIF capture district.

Several board members weighed in on the issue during the April 3 meeting. The idea of any kind of cap – let alone one that’s based on estimates contained in the appendix of the DDA’s TIF plan – was sharply criticized by Joan Lowenstein, who characterized the approach as based on “a fallacy.” She also called the idea of a cap poor public policy. However, both the cap and its basis are already in the existing ordinance language that the city council’s ordinance amendment seeks to clarify.

Roger Hewitt took the board’s meeting as an opportunity to question whether the ordinance amendments actually clarify how the calculations are to be done, contending that he’d come up with different results than the city treasurer, starting from the same ordinance language. He cautioned that the DDA’s financial planning and the DDA’s budget would need to be re-evaluated – allowing for no “sacred cows” – if the council gave final approval to the ordinance changes.

Russ Collins contrasted the amount of net revenue received by the city from the geographic area of the DDA district before the DDA was established back in 1982, compared to today. The net proceeds from taxes and the public parking system (which lost about $250,000 a year during that era) came to about $1.25 million 30 years ago, according to Collins. Today, the city receives nearly $8 million annually – around $4 million in taxes, $3 million in parking revenue, and a grant to the city of roughly $0.5 million a year toward debt on the city’s new Justice Center building.

Bob Guenzel focused his remarks less on the financial side and more on the aspects of the ordinance change that would restrict future board membership. He saw no benefit to the proposed DDA term limits, noting that the city council has an opportunity to end a DDA board member’s service by deciding not to re-appoint someone to the board. John Mouat was critical of the proposed ordinance changes that would prevent elected officials of taxing jurisdictions from serving on the board, saying he’d found the participation of politically-connected people to be beneficial to the board.

The extended remarks by board members on the topic came in the context of a 7-3 vote by the city council on April 1, giving initial approval of the ordinance changes. [Christopher Taylor (Ward 3) was absent from the meeting of the 11-member council.] A second vote, expected at the council’s April 15 meeting, would be required to enact the changes. Based on their remarks made at the council table, two of the seven votes in support of the changes – by Marcia Higgins (Ward 4) and Sabra Briere (Ward 1) – were widely read as likely to change at the second vote. Ordinance changes require a six-vote majority.

In addition to discussion of the possible ordinance changes, the DDA heard its usual range of committee reports, including the monthly parking update. Public commentary related to a possible artificial ice-skating rink atop the Library Lane underground parking garage. [Full Story]

DDA Tax Capture Change Gets Initial OK

Several revisions to Chapter 7, a city ordinance governing the Ann Arbor Downtown Development Authority (DDA), have received an initial approval by the city council. One of the revisions could result in roughly $559,000 in additional annual revenue for the city of Ann Arbor – compared to what it would receive under the DDA’s current interpretation of the ordinance.

The 7-3 vote came at the council’s April 1, 2013 meeting. In order to be enacted, the changes will need to receive approval from the council at a subsequent meeting, following a public hearing.

The revisions considered by the council fell roughly into two categories: (1) those involving board composition and policies; and (2) calculation of tax increment finance (TIF) capture in the … [Full Story]

Planning, DDA: City Council to Set Course?

Ann Arbor city council meeting (March 18, 2013) Part 1: The two main events of the council’s meeting centered around planning in the downtown area: (1) consideration of a possible moratorium on D1 (downtown core) site plans; and (2) consideration of the site plan for 413 E. Huron, located in a D1 district.

The March 18, 2013 city council meeting did not adjourn until nearly 2 a.m. From left: Sabra Briere (Ward 1), Margie Teall (Ward 4) and city administrator Steve Powers.

The March 18, 2013 city council meeting did not adjourn until nearly 2 a.m. From left: Sabra Briere (Ward 1), Margie Teall (Ward 4) and city administrator Steve Powers. (Photos by the writer.)

The council decided to conduct a review of D1 zoning, without imposing a moratorium. That cleared the way to consider the 413 E. Huron project, which the council eventually voted to postpone – at roughly 1:30 a.m. Because of the amount of time spent on just those items, they’ll be included in a separate Chronicle report.

Apart from those two items, the council’s agenda still included a planning and land use focus, as well as a downtown theme. An additional theme was the city council’s relationship to two other public bodies – the city planning commission and the board of the Ann Arbor Downtown Development Authority.

In the case of the planning commission, the council for a second time balked at the commission’s recommendation of R3 (townhouse) zoning for a recently annexed parcel on Ellsworth near Stone School Road – planned as the site of Summit Townhomes, which would be a 24-unit development. The council postponed consideration of the Summit Townhomes site plan and the zoning, having previously postponed the zoning. The council also had previously referred the zoning recommendation back to the planning commission for re-review. The council’s second postponement on March 18 came after the commission’s re-affirmation of its original recommended R3 zoning. The council sent no explicit communication to the planning commission requesting action, beyond the implicit message of postponing the vote.

In the case of the DDA board, the council is weighing changes to the city ordinance governing the composition of that body, but postponed those changes for a second time at its March 18 meeting. The more significant of the ordinance changes involves clarifying how the Ann Arbor DDA’s tax increment finance capture is calculated, which has implications for millions of dollars for the DDA, the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library.

Also related to the DDA, early in the council’s meeting an oral report was given on a session of the council’s audit committee – held the previous week to review the DDA’s FY 2012 audit. In the middle portion of the council meeting, councilmembers postponed the ordinance changes. And in the early morning hours of March 19, after the voting agenda was concluded, a member of the audit committee – Sally Petersen (Ward 2) – announced her intention to propose a task force on the DDA.

Related to other boards and commissions, the council confirmed the appointment of a chair for the zoning board of appeals (ZBA): Alex Milshteyn. He replaces Carol Kuhnke, who resigned in December 2012 after being elected judge of the 22nd Circuit Court.

In other business, the council gave approval for the zoning and site plan of The Shoppes at 3600, a proposed retail development on Plymouth Road.

The council also voted to object to the renewal of a liquor license for The Arena, a downtown bar located at Division and Washington streets. The basis for the objection – which will be forwarded to the Michigan Liquor Control Commission for final action – was non-payment of taxes.

The council also gave initial approval to a revision to the city’s sign ordinance. It would essentially maintain current conditions, but provide for certain limited digital signs with a restricted range of changeable elements.

Council communications included a briefing on upcoming changes the council will be asked to consider for the city’s public art ordinance. In other communications, the council will be giving a fire station reconfiguration plan some additional explicit discussion at a future working session – although it appears that the idea has insufficient traction to move forward.

Public commentary at the meeting covered a range of topics, including a call for the council to waive privilege on legal advice that councilmembers had received on the D1 moratorium issue – because they’ve now voted not to enact the moratorium. [Full Story]

Ann Arbor Council Again Delays on DDA

Several revisions to a city ordinance governing the Ann Arbor Downtown Development Authority (DDA) have again been postponed by the city council. After voting to postpone the question at its March 4, 2013 meeting, the council again delayed voting at its meeting on March 18. The question will next appear on the council’s agenda at its April 1 meeting.

Even if the council had voted to approve the proposed amendments, a second and final vote would be required to enact the ordinance changes.

Ann Arbor DDA TIF revenue under various methods of calculation. City of Ann Arbor financial staff chart … [Full Story]

Council’s Meeting Dominated by Downtown

Ann Arbor city council meeting (March 4, 2013): The council had five items on its agenda related geographically to downtown Ann Arbor – but delayed voting on two of them.

Architect Brad Moore (left) talks with resident Ray Detter. Moore is architect for two projects that were on the council's March 4 agenda – Blue Heron Pond and 624 Church St. The councils approval of both site plans indicates the council is not contemplating imposing a Moore-atorium on site plans.

Architect Brad Moore (left) talks with resident Ray Detter. Moore is architect for two projects that were on the council’s March 4 agenda – Blue Heron Pond and 624 Church St. The council’s approval of both projects indicates the governing body is not contemplating a Moore-atorium on site plans. (Photos by the writer.)

On one of those items, the council voted to postpone its initial consideration of changes to Chapter 7 of the city code, which governs the way the tax increment finance (TIF) capture is calculated for Ann Arbor’s downtown development authority. The revisions to Chapter 7 would also affect the composition of the DDA board, excluding elected officials from service.

The council also postponed until its next meeting, on March 18, a possible moratorium on site plan review for projects in the downtown. The possible moratorium previously had been postponed from the council’s Feb. 19 meeting. After hearing extensive public commentary on the topic on March 4 – from residents and representatives of the developer of a proposed 14-story residential project at 413 E. Huron – the council went into closed session.

On emerging from the closed session, the council voted, without deliberation, to postpone the item. The wording in the resolution provides an exemption from the moratorium for site plans that already have a recommendation for approval from the city planning commission. If enacted, the moratorium as worded would still apply to the 413 E. Huron project, because the planning commission’s 5-3 vote for approval fell short of the six it needed for a positive recommendation. The 413 E. Huron site plan is now expected to be on the same March 18 meeting agenda when the moratorium will be re-visited.

Eluding the impact of the proposed moratorium’s wording was another downtown project, which appeared on the March 4 meeting agenda. The site plan for a 14-story apartment building at 624 Church St. was approved at the council’s meeting – but that project would not have been impacted by the moratorium as it’s currently proposed. That’s because it had received a recommendation of approval from the city planning commission.

The council also voted to reconstitute a task force to re-evaluate the downtown design guidelines, which supplement the city’s zoning regulations.

In the final downtown-related item, the council voted to direct the city administrator to issue a request for proposals for brokerage services to possibly sell the city-owned parcel at Fifth and William streets – the location of the former Y building. It’s currently used as a surface parking lot in the city’s public parking system.

While the city is contemplating the sale of that site, which it purchased for $3.5 million, the council voted to buy a much less expensive parcel outside the downtown, near the Bluffs Nature Area. The council approved a purchase price of $115,000 for the parcel, which is located off Orkney Street.

The council also approved two other site plans for projects not in the downtown – although the four-unit project at 515 N. Fifth is near the downtown. The council also approved the Blue Heron Pond development, a 64-unit project on the western side of town, located at Liberty and Maple.

In other business, the council approved receipt of a federal grant to demolish two of the buildings on the city-owned property at 721 N. Main. The buildings are in the floodway. A third building, in the flood fringe, is being studied by the city for possible reuse.

The property at 721 N. Main is a former maintenance yard. So none of the 44 vehicles authorized for purchase by the council at the March 4 meeting will be maintained there. Total cost of the vehicles was $928,499.

None of the vehicles authorized for purchase was a plug-in electric vehicle. However, the council passed a resolution in support of preparing city infrastructure for plug-in vehicles. Two-other energy-related agenda items included one supporting the city’s participation in Earth Hour, and another one supporting use of the city’s energy fund for energy improvements in connection with community projects.

An item that drew considerable discussion before approval related to street closings associated with the June 9, 2013 Ann Arbor marathon. [Full Story]

Ann Arbor DDA: We’ve Been Good Stewards

Ann Arbor Downtown Development Authority board meeting (March 6, 2013): In a main agenda item, the DDA board authorized a $300,000 grant to the Ann Arbor Housing Commission – for renovations to the 64-unit Baker Commons public housing facility. It added to the $280,000 grant made late last year for the replacement of the Baker Commons roof.

DDA board member Keith Orr delivered extended remarks in response to a proposal currently being weighed by the Ann Arbor city council that would make amendments to the city ordinance governing the downtown development authority.

Ann Arbor Downtown Development Authority board member Keith Orr delivered extended remarks in response to a proposal currently being weighed by the Ann Arbor city council that would amend the city’s ordinance governing the DDA. (Photos by the writer.)

The grant award had come at the request of AAHC executive director Jennifer L. Hall, who’s proposing a major change to the way the 360 units of public housing are administered. The approach involves privatization and project-based vouchers.

The DDA’s support for public housing also surfaced at the meeting as a talking point for board members in the context of a proposal being considered by the Ann Arbor city council – which would amend the city ordinance regulating how the DDA’s tax increment finance (TIF) capture works. The amendments would clarify existing language in the city ordinance in a way that would favor the other taxing authorities, whose taxes are captured as a part of the DDA’s TIF. The council postponed action on that proposal at its March 4, 2013 meeting. In that context, at the DDA’s March 6 meeting, board member Sandi Smith raised the specter that the DDA would in the future not be able to support affordable housing in the same way it has done in the past.

In addition to clarifying the question of how TIF is calculated, the amendments would prevent elected officials from serving on the board and would impose term limits for board service. Board members took turns at the start of the meeting arguing that the DDA had been a good steward of public dollars and that the amendments to the ordinance are not warranted. Board members indicated that they didn’t think their service as volunteer members of a board was being afforded adequate respect by the city council.

The board comments followed a turn at public commentary at the start of the meeting from Brendan Cavendar of Colliers International, a commercial real estate services firm. His commentary departed from the typical pattern of someone signing up to address the board for up to four minutes. Instead, Cavendar had been invited to appear, and responded to prompts from board members to deliver a range of positive responses, including: future tenancy of the former Borders location; rising rents in the downtown area; and affirmation of the importance of the downtown public parking system.

The city’s public parking system is managed by the Ann Arbor DDA under a contract with the city of Ann Arbor. The monthly parking usage report is featured at every board meeting. But the March 6 meeting featured the parking system in an additional way. The board decided to award the full $50,000 of a discretionary management incentive to the DDA’s subcontractor – Republic Parking – for operation of the public parking system. It’s an annual decision, but it’s the first time in the last five years that the full amount has been awarded. The decision was based on good performance on metrics tracked by the DDA, according to the board.

In a third voting item, the board authorized $610,662 in support of getDowntown’s go!pass program, which provides a subsidy to cover the cost of rides taken on Ann Arbor Transportation Authority buses by employees of participating downtown businesses. To participate, a business must purchase a go!pass for all employees, at an annual cost of $10 per employee. Roughly 6,500 downtown employees are provided with go!passes through the program. [Full Story]

Council Delays Vote on DDA Tax Capture

Several revisions to a city ordinance governing the Ann Arbor Downtown Development Authority (DDA) were postponed by the city council at its March 4, 2013 meeting. Some of the proposed revisions would have an impact of several million dollars over the next two decades, affecting several jurisdictions besides Ann Arbor. The postponement was until the council’s March 18  meeting.

Ann Arbor Downtown Development Authority tax increment finance district is shown in blue.

Ann Arbor Downtown Development Authority tax increment finance district is shown in blue.

Among the revisions to Chapter 7 that are being considered by the council … [Full Story]

Column: Let’s Get DDA Tax Capture Right

The Ann Arbor city council’s March 4, 2013 agenda includes a proposed change to the city ordinance (Chapter 7) governing the Ann Arbor Downtown Development Authority. I think most of those ordinance amendments have considerable merit, and warrant the council’s consideration. But it’s possible that the amendments themselves won’t receive their due consideration, because they’ll be dismissed as politically motivated.

Ann Arbor DDA TIF capture: Actual valuation (green line) of the increment compared to projected valuation in the TIF plan (blue bars corresponding to one of three estimates – pessimistic, realistic, optimistic.

Ann Arbor DDA tax increment finance (TIF) capture: Actual valuation (green line) of the increment compared to projected valuation in the DDA TIF plan (blue bars correspond to one of three estimates – pessimistic, realistic, and optimistic).

The Chapter 7 amendments are being proposed by Stephen Kunselman (Ward 3), who’s been joined by Sumi Kailasapathy (Ward 1) in sponsoring them. Kailasapathy’s co-sponsorship might help only incrementally to buffer the proposal against criticism that they’re motivated by Kunselman’s personal political aspirations.

On that theory, Kunselman is proposing revisions to Chapter 7 in an effort to raise his profile – in anticipation of a possible mayoral candidacy in 2014, and to shore up support for his Ward 3 re-election campaign his year. Given that he took out petitions for the 2013 Democratic primary on Nov. 3, 2012 – before the Nov. 6 general election – and collected signatures outside the polls, it’s pretty clear that he’s eager to seek re-election to his council seat. And last time around, in 2011, he campaigned as much against the DDA as he did against either of his two opponents. Kunselman is quoted in the February 2013 issue of the Ann Arbor Observer saying that if mayor John Hieftje runs for re-election next year, he’ll run against Hieftje.

However, on the theory that these proposed amendments are all about Stephen Kunselman and not about good public policy, I figure it’s also reasonable to toss in another possibility. Perhaps Kunselman is trying to raise his profile enough to win local blog Damn Arbor’s current poll as “most attractive councilmember.” The poll includes Kunselman as one of just four nominated councilmembers. It’s not clear to me if the voting is meant to include sartorial choices, but if it does, Kunselman could objectively be considered a natty dresser.

All kidding aside, it would be easy and convenient to dismiss the Chapter 7 amendments as a political ploy, and save the work of understanding some gnarly tax calculations. [You'll have a head start on this if you've read my previous column on the issue: "Tax Capture is a Varsity Sport."]

But I think at least some of the proposed changes to Chapter 7 have considerable merit, independent of Kunselman’s political ambitions. Millions of dollars are at stake. As councilmembers give this proposal initial consideration on March 4, I hope they focus on the tax-related amendments. [Full Story]

618 S. Main Gets Go-Ahead from Council

At its June 18, 2012 meeting, the Ann Arbor city council approved the site plan and the brownfield development financing for the 618 S. Main project.

The 618 S. Main project is an apartment complex that developer Dan Ketelaar intends to market to young professionals. The 7-story building would include 190 units for 231 bedrooms, plus two levels of parking for 121 vehicles. The project had received approval from the city planning commission on Jan. 19, 2012.

At 85-feet tall, the project is 25 feet higher than permitted in the D2 (downtown interface) zoning district where the site is located. So it was submitted as a “planned project” – a provision in the zoning code that allows some flexibility in height or setbacks, in exchange for public … [Full Story]

Ann Arbor DDA OKs 618 S. Main Grant

At its June 6, 2012 meeting, the Ann Arbor Downtown Development Authority authorized a grant to the 618 S. Main project, totaling $650,000 over four years. The vote was unanimous.

The grant assumes that the amount of additional tax increment finance (TIF) revenue that the DDA would capture as a result of completed construction of the project would be $250,000 a year. The money is granted to pay for streetscape improvements on Main  and Mosley streets, and the upsizing of the water main under Ashley Street to a 12-inch main. The originally-proposed grant totaled $725,000, but that amount was reduced through amendments made at the board meeting, which eliminated bank carrying costs as an expense to be covered. Another amendment reduced … [Full Story]

Ann Arbor DDA Updates: Budget, TIF Talk

Ann Arbor Downtown Development Authority board meeting (April 4, 2012): The absence of four out of 12 DDA board members had no effect on any outcomes at the meeting, because the board did not have resolutions on its agenda.

Susan Pollay, Marcia Higgins

Before the Ann Arbor Downtown Development Authority's April 9 budget presentation to the Ann Arbor city council, DDA executive director Susan Pollay rolls up her sleeves as she chats with councilmember Marcia Higgins (Ward 4). (Photos by the writer.)

The meeting took place against the backdrop of the DDA’s budget presentation to the city council the following week – on April 9 – and various other ongoing projects. So the board’s agenda consisted of a collection of regular committee updates and status reports.

Those included an update on the Connecting William Street project – an initiative to explore alternative uses of a limited set of city-owned parcels currently used for parking. The DDA embarked on the project at the direction of the Ann Arbor city council in a resolution it approved about a year ago – on April 4, 2011. The DDA had wanted the ability to lead that exploration, partly in exchange for renegotiating a contract under which the DDA operates the city’s public parking system. That new contract was finally settled on May 31, 2011, and features a clause that provides the city of Ann Arbor 17% of gross revenues out of the public parking system.

Total parking revenues for fiscal year 2013 are projected at around $18 million in the budget approved by the DDA board at its meeting the previous month, on March 7, 2012. That budget was presented by the DDA at a city council work session on April 9. The budget presentation featured a review of the DDA’s history of infrastructure investment and impact on the downtown district since its formation in 1982 – over $100 million of DDA investment, accompanied by $300 million in private investment and an increase in taxable value from $89 million to $386 million.

Another work session highlight was a series of questions posed by councilmember Stephen Kunselman (Ward 3) about compliance with Ann Arbor’s ordinance that regulates how the tax increment finance (TIF) tax capture works for the DDA district. Last year, the city’s financial staff pointed to Chapter 7 of the city code, which appears to limit the amount of taxes the DDA can “capture” from the other taxing units in the district. The DDA board agreed with the city’s interpretation, and returned $473,000 in combined TIF revenues to the Ann Arbor District Library, Washtenaw Community College and Washtenaw County.

Subsequently, the DDA reversed its position and gave a different interpretation to Chapter 7. Responding to Kunselman at the work session, DDA board chair (and retired Washtenaw County administrator) Bob Guenzel told Kunselman that the DDA had informed other taxing units of the DDA’s revised position, which was not to say they agreed with the DDA, he said.

Also the focus of TIF monies captured by the DDA is a proposed development at 618 S. Main, which received a positive recommendation from the Ann Arbor planning commission on Jan. 19, 2012. The 7-story building would include 190 units for 231 bedrooms, plus two levels of parking for 121 vehicles. The developer of the project, Dan Ketelaar, has estimated that the tax on the increment between the current valuation of the property and the final built project would yield around $250,000 a year in TIF revenue to the DDA.

Ketelaar is was initially asking that in addition to reimbursement of certain costs (at around $1.4 million) within six months of the project’s completion, the DDA pledge 80% of its TIF capture money for six years – an additional $1.3 million – to support certain aspects of the project in connection with the state’s Community Revitalization Program. But subsequently, Ketelaar revised the request to include just the TIF reimbursement. So the total request, over six years, is $1.3 million. The CRP is the successor to the brownfield and historic preservation tax credit program. In order to approve the tax credit, the state would like to see a commensurate commitment from local units – and Ketelaar is proposing that it take the form of the DDA’s support.

Ketelaar has pitched his idea to the DDA board on several occasions now – first at the full board meeting on Feb. 1, 2012, and at three subsequent DDA partnerships committee meetings. DDA board members are cautious about the precedent that such a pledge might set, and the appropriateness of the DDA’s role at this early stage in the project. (Ketelaar has not yet acquired the land.) At the March 28 partnerships committee meeting, DDA board member Newcombe Clark expressed concern that, depending on the precise role defined for the DDA’s participation, the DDA could effectively be artificially inflating land values.

This report takes a look in more detail at Connecting William Street, the DDA’s April 9 budget presentation to the city council, the lingering TIF capture issue, and the 618 S. Main project, as well as odds and ends from the April 4 DDA board meeting. [Full Story]

Council: DDA Can Decide Own Tax Capture

At its April 2, 2012 meeting, the Ann Arbor city council declined to pass a resolution that would have asked city staff to verify the compliance of the Ann Arbor Downtown Development Authority with the city’s ordinance that governs how the DDA’s tax capture works. In declining to pass the resolution, the council gave its implicit approval to the DDA’s interpretation of the ordinance, which the DDA currently claims does not, in fact, limit its tax capture.

That’s a reversal of both the DDA and the city’s position from last May, when city financial staff pointed out the implications of the city ordinance. The result was a computation of excess TIF capture of over $1 million. The city of Ann Arbor … [Full Story]

Committee Briefed on Downtown Sidewalks

As the Nov. 8, 2011 general election approaches, the Ann Arbor Downtown Development Authority is considering the implications that a ballot question might have on the DDA’s tax increment finance (TIF) district. The ballot question asks voters to approve a sidewalk repair millage that would levy a new tax of 0.125 mills. A mill is $1 for every $1,000 of a property’s taxable value.


Part of the discussion at the DDA transportation, operations and construction committee meeting included the “two-inch” rule on vertical sidewalk displacement. A law working its way through the state legislature would establish that a city is presumed to have maintained a sidewalk properly, but that can be rebutted by evidence showing that the proximate cause of an injury was a “vertical discontinuity” defect of 2 inches or more in the sidewalk. (Photo by the writer.)

Members of the DDA’s transportation, operations and construction committee were briefed on that and a number of other issues at its regular monthly meeting on Wednesday, Sept. 28. (The committee has a combined function for what were at different times in the past three separate committees.)

The committee was also briefed on: (1) the status of the getDowntown program; (2) a parking communications plan aimed at evening employees; (3) the financial picture for the city’s public parking system; and (4) the results of a parking customer satisfaction survey.

Committee members were somewhat surprised and disappointed to learn that the city council’s policy on the use of proceeds from the proposed sidewalk millage would place restrictions on using millage money inside the boundaries of the DDA’s TIF district.

The city council’s Aug. 4 resolution authorizing ballot language for the proposed 0.125 mill tax places a limitation on the use of funds inside the TIF district, though the wording on the ballot does not include the limitation. The resolution states that inside the DDA district, only those sidewalks adjacent to single- and two-family houses (but not other commercial properties) would be included in a millage-supported sidewalk repair program.

A resolution of intent on the use of the sidewalk millage, which includes the restriction inside the DDA TIF district, was postponed from the council’s Sept. 19 meeting, and will be taken up by the council again on Oct. 3.

At their Wednesday meeting, DDA committee members were also apprised that the getDowntown program, which draws the majority of its funding from the DDA, will not be folded into the DDA as had previously been planned. Instead, the program’s two staff members will remain employees of the Ann Arbor Transportation Authority. The getDowntown program’s status has been a question since the Ann Arbor Area Chamber of Commerce (now the Ann Arbor/Ypsilanti Regional Chamber) two years ago pulled out of the four-way partnership that supported getDowntown. The remaining three partners are the city of Ann Arbor, the DDA and the AATA.

The committee was also briefed on elements of the DDA’s communications plan that’s aimed at downtown evening employees, in connection with possibly extending parking meter enforcement hours past 6 p.m. Other parking-related issues on the committee’s agenda included a structure-by-structure breakdown of the financial performance of the city’s parking garages, as well as an overview of the results of a regular parking system survey used to evaluate Republic Parking, the DDA’s parking contractor.

This report focuses on sidewalks and getDowntown. [Full Story]

Library Weighs DDA Excess Tax Decision

During her written director’s report for the Ann Arbor District Library’s Aug. 15, 2011 board meeting, AADL director Josie Parker noted that the library is considering the legal and financial implications of the Ann Arbor Downtown Development Authority’s decision regarding “excess” taxes captured in the DDA’s tax increment finance (TIF) district. The AADL board began its meeting with a closed session to discuss the opinion of its legal counsel, as well as for labor negotiations. The board did not discuss the issue during the public portion of its meeting, but scheduled another closed session to hear the opinion of legal counsel at its Sept. 19 meeting.

At issue is the interpretation of a city ordinance about TIF capture in the DDA’s downtown district, … [Full Story]

DDA: No TIF Recalculation

At a special meeting held on July 27, 2011, the Ann Arbor Downtown Development Authority board passed a resolution stating that it was accepting the general guidance of its legal counsel, Jerry Lax: The DDA will not be changing the calculations on which it based the return (earlier this year) of excess taxes captured through its tax increment finance (TIF) district. The decision came after a closed session with Lax that lasted nearly an hour. The language of the resolution is somewhat vague, stating that “no redistribution to relevant taxing authorities is required.”

Some background: At its May 2, 2011 meeting, as it was poised to ratify a new contract with the city of Ann Arbor, under which it … [Full Story]

Column: Taxing Math Needs a Closer Look

A bit more than a month ago, the Ann Arbor Downtown Development Authority board was poised to ratify a new contract with the city of Ann Arbor, under which it would continue to manage the city’s public parking system. But at noon on May 2, when board members met, they were greeted with some news that caused them to postpone their vote on that 11-year deal, which called for 17% of gross parking revenues to be transfered to the city of Ann Arbor.

Excess TIF Capture

Blue bars represent the "optimistic" projections of the increment valuation in the Ann Arbor DDA's TIF plan. The red line represents actual valuation of the increment on which taxes have been captured. For 2013-2014, the valuation is based on estimates in the DDA's 10-year planning document.

That news had been conveyed to DDA staff by the city of Ann Arbor’s finance department just that morning: Some of the taxes captured in the DDA’s tax increment finance (TIF) district since 2003 might be owed to local taxing units, including the city. With an uncertain financial obligation to return TIF monies that had already been captured from taxing units in the district, the DDA board understandably balked at approving the new parking contract on May 2.

The postponement of the DDA’s vote on that contract ultimately led to a delay in the Ann Arbor city council’s adoption of the city’s fiscal year 2012 budget – as the council stretched its May 16 meeting to May 23 and then on to May 31. But by the end of May, the issue of excess TIF capture had been settled to the DDA board’s satisfaction, and the parking contract was ratified – first by the DDA, and then by the city council.

The Ann Arbor city council was also content with the DDA’s proposed solution to the excess TIF capture. That solution included returning a total of roughly $473,000 to the Ann Arbor District Library, the Washtenaw Community College and Washtenaw County. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess.

Those three other taxing units no doubt welcomed the news that their budgets would get an unexpected boost. But the governing bodies of those taxing units should take a closer look at how the excess TIF was calculated. If they do, they will discover that the amount actually due to be returned to them (and divided proportionately as required under the city’s of Ann Arbor’s DDA ordinance) may not be $473,000, but more than twice that: $1.27 million. In ballpark numbers, for the Ann Arbor District Library that translates to the difference between about $75,000 and $200,000. For Washtenaw County, it’s the difference between $242,000 and $648,000. And for Washtenaw Community College, it’s the difference between $157,000 and $419,000. [Full Story]

DDA: Parking, Excess Taxes Still Not Done

Ann Arbor Downtown Development Authority special board meeting (May 20, 2011): A special meeting held by the board of the DDA on Friday was meant to give some final resolution to the DDA’s side of a new contract under which it would continue to operate the city’s public parking system.

Bob Guenzel, John Mouat, Sandi Smith, Russ Collins, DDA special board meeting

Left to right: DDA board members Bob Guenzel, John Mouat, Sandi Smith, and Russ Collins at the May 20 DDA special board meeting. Obscured from view between Guenzel and Mouat is John Hieftje. They were distributing the paper handouts with calculations of excess TIF revenues. (Photos by the writer.)

It was also intended to settle the matter of excess capture of TIF (tax increment finance) revenue in the DDA district – an issue raised by the city of Ann Arbor just before the DDA board had originally planned to vote on the new parking contract on May 2.

The board did vote on Friday to affirm a calculation by DDA staff that roughly $473,000 of excess TIF capture since 2004 would be divided among the following taxing authorities, which have a portion of their tax revenues captured in the DDA TIF district: Washtenaw County; Washtenaw Community College; and the Ann Arbor District Library.

Based on a representation at the special meeting by mayor John Hieftje – who has a statutory seat on the DDA board – the city of Ann Arbor is likely to agree to “forgive” the $711,767 in excess TIF capture that would be due to the city. More than that amount has effectively already been returned to the city, in the form of a roughly $0.5 million annual grant to the city to help make bond payments on its new municipal center, and a $1 million expenditure to demolish the old YMCA building, as well as other grants. In total, around $7.5 million has gone to the city, according to the DDA.

At Friday’s special meeting, the DDA board also voted to ratify its side of a new contract under which it would continue to operate the city’s public parking system. Among other features, the new contract would obligate the city of Ann Arbor to report regularly on how it is using public parking system revenues for street repair in the downtown, and how it is enforcing parking regulations downtown.

More controversially, the new contract would allow the DDA to set parking rates. Currently, the DDA forwards proposed rate changes to the city council, which can then veto the DDA’s proposal if it acts within 60 days. If the council does not act to block the rate change, the change is enacted. Although Hieftje said at the DDA board meeting he felt there was adequate support on the council to approve such a contract, there are currently at least five likely no votes on the 11-member council.

Also controversial is the exact percentage of gross revenues the city would receive from the public parking system. Before the issue of the excess TIF capture arose, the DDA board was poised to ratify a parking contract that would transfer 17% of gross parking revenues to the city of Ann Arbor’s general fund. At Friday’s special meeting, the resolution before the board dropped that number to 16%. Hieftje proposed an amendment to raise the figure to 17%. That amendment was attached to a contingency that the city council would provide a plan amendable to the DDA in which the city would “underwrite” the DDA’s fund balances. It was the 17% with a contingency that the DDA board passed.

So the special DDA board meeting did not settle with finality either the issue of the excess TIF capture or the DDA’s side of the parking contract. For the TIF capture issue, the relevant taxing authorities – especially the city of Ann Arbor – will need to affirm the solution that the DDA board approved.

For the parking contract issue, the DDA’s contingency means that the city council’s Monday, May 23 meeting – which is a continuation of its May 16 meeting, when it was supposed to approve the FY 2012 budget – will likely be recessed and continued again on May 31.

One possibility for how events would unfold is this: (1) May 23 – the city council ratifies the city’s side of the parking contract and provides the plan for underwriting DDA fund balances; city council also deliberates and amends FY 2012 budget but does not take a final vote on it; (2) May 24-27 – DDA schedules a special meeting to accept the parking contract contingency; and (3) May 31 – city council resumes the meeting started May 16 and previously continued on May 23, and approves FY 2012 budget. [.pdf of draft parking contract] [Full Story]

Ann Arbor DDA to Return $473K in Taxes

At a special meeting held at noon on Friday, May 20, the board of the Ann Arbor Downtown Development Authority voted to return $473,365 in taxes previously captured as part of the DDA’s tax increment finance (TIF) district. The money will be divided among three taxing authorities: Washtenaw County ($242,179); Washtenaw Community College ($156,520); and the Ann Arbor District Library ($74,666).

The decision was prompted by questions raised on Friday, April 29 by the city of Ann Arbor about the implementation of the city’s ordinance governing TIF capture for the DDA district. The ordinance includes a clause stipulating that if the growth rate in the TIF capture exceeds what is anticipated in the formal TIF plan, at least half of the excess must be divided proportionately among the taxing authorities that had some of their taxes captured in the TIF district.

The total amount of excess TIF capture that has accumulated since 2004 in the Ann Arbor DDA district is $1,185,132. The difference between that total and the combined $473,365 to be paid to Washtenaw County, WCC and AADL is $711,767. That difference is the proportionate share that would be due to the city of Ann Arbor (including the Ann Arbor Transportation Authority), which also has some of its taxes captured in the DDA TIF district. In fact, around 60% of the taxes captured in the TIF district are due to city of Ann Arbor millages.

However, Friday’s resolution included a “whereas” clause indicating that the city of Ann Arbor is likely to recognize that the $711,767 in excess TIF capture has effectively already been returned to the city, in the form of (1) a roughly $0.5 million annual grant to the city to help make bond payments on its new municipal center, and (2) a $1 million expenditure to demolish the old YMCA building, as well as other grants.

The determination of the excess was based on: (1) the “optimistic” projections in the TIF plan; (2) the combined real and personal property valuations in the district; and (3) excess growth calculated by comparing the actual growth rate between successive years against the forecast growth rate in the TIF plan between those years.

The payments to the other three taxing entities are planned to be made before June 30, making them a part of the 2011 fiscal year, which ends June 30. That will require the board to amend the FY 2011 budget.

The financial impact of the payments on the DDA led the board on Friday to review the financial component to the new contract currently being negotiated with the city under which the DDA operates Ann Arbor’s public parking system.

Before the excess TIF issue came to light, the DDA board had been prepared on May 2 to agree to a contract that would have transferred 17% of gross parking revenues to the city each year. Gross parking revenues are projected to be around $16 million in the next year.

At Friday’s meeting, the DDA board ratified its side of an agreement that would transfer 17% of gross parking revenues to the city, but added a contingency that would require the city of Ann Arbor to formalize a plan proposed by mayor John Hieftje to backstop fund balances for the DDA.

The contingency means that the city council’s May 16 budget meeting, which is continuing on May 23, will likely continue past that Monday to resume again on Tuesday, May 31. Hieftje, who also sits on the DDA board, said he felt there would be sufficient support on the council on May 23 to ratify the parking contract and formalize the backstopping plan.

The DDA will need to schedule another special meeting the week of May 23 after the council meets to resolve the contingency. The council would then be able to finalize its budget on May 31.

This brief was filed from the DDA’s offices at 150 S. Fifth Ave., where the special meeting took place. A more detailed report will follow: [link] [Full Story]