Stories indexed with the term ‘TIF’

DDA OKs $100K for Sidewalks, Trees

Tree maintenance and sidewalk repairs in downtown Ann Arbor will get $100,000 of support from the Ann Arbor Downtown Development Authority as a result of board action taken at its July 2, 2014 meeting.

The work will include repairs like displaced bricks and uneven sidewalk flags, as well as pruning of trees.

The money to pay for the work will be drawn from tax increment finance (TIF) revenue, which the DDA is authorized to capture under state statue.

The project was recommended by the DDA’s operations committee. The board vote was unanimous.

This brief was filed from the DDA offices, 150 S. Fifth Ave., Suite 301, where the DDA board holds its meetings.

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 Board Weighs Pittsfield Twp. Proposal

Ann Arbor District Library board meeting (Sept. 16, 2013): Representatives from Pittsfield Township briefed AADL trustees about a proposed State Road corridor improvement authority (CIA) that would entail capturing a percentage of taxes from several local entities, including the Ann Arbor District Library.

Dick Carlisle, Craig Lyon, Pittsfield Township, Ann Arbor District Library, The Ann Arbor Chronicle

From left: Consultant Dick Carlisle and Craig Lyon, director of utilities and municipal services for Pittsfield Township, attended the Sept. 16, 2013 meeting of the Ann Arbor District Library board, which was held at the Malletts Creek branch on East Eisenhower. The men gave a presentation on a proposed State Road corridor improvement authority in the township. (Photos by the writer.)

Planning consultant Dick Carlisle and Craig Lyon, director of utilities and municipal services for Pittsfield Township, described the new authority and the roughly $30 million in improvements it would fund between the I-94 interchange and Michigan Avenue. The intent is to create a four-lane boulevard with a median, bike lanes and pedestrian pathway.

The library’s Pittsfield branch is located in the township, and a portion of the AADL district is included in the northern part of the proposed CIA. Under the CIA’s tax increment financing plan, 50% of the increase in taxable value would be captured over a 20-year period to fund the CIA projects. The captured taxes would otherwise go to the entities that levy those taxes. Currently, AADL receives about $8,536 in taxes from taxpayers in the proposed CIA boundaries.

In responding to questions from trustees, Carlisle alluded to ongoing controversy related to the TIF capture by the Ann Arbor Downtown Development Authority. He said that’s why Pittsfield Township is offering to enter into specific agreements with each taxing jurisdiction “that will carefully spell out the limitations on what will actually occur here. So this way, there is no blank check. It is very specific that what we are saying here is exactly what we are going to do.”

A two-year disagreement has persisted over the way the Ann Arbor DDA  calculates its TIF capture, which includes capture of AADL taxes. For the latest Chronicle coverage on this issue, see: “Library View on DDA TIF Capture: Unchanged.”

When the Ann Arbor DDA was formed in the early 1980s, the state enabling legislation for DDAs did not allow for taxing jurisdictions to opt out of participation. However,  CIA legislation includes an opt-out provision. AADL and other taxing entities will have a 60-day period to make that decision. That period is expected to begin when the Pittsfield Township board holds a public hearing about the CIA proposal on Oct. 9.

Based on questions from AADL trustees, they may be skeptical about whether participating in the CIA would be a wise move for the library.

The CIA presentation was the library board’s main agenda item on Sept. 16. The board also reviewed data for the month of August in five categories: Collections, users, visits, usage and participation. In addition, associate director Eli Neiburger presented highlights from the AADL summer game, which wrapped up last month.

During her director’s report, Josie Parker noted that AADL recently released an archive feature on the history of the Ann Arbor Garden Club. It’s part of a broader archiving effort on local history, which includes architecture, cooking, the Ann Arbor police department and several other organizations and topics. Parker said AADL staff would be pleased to talk to anyone who’s interested in archiving the history of other local organizations online.

Parker also told trustees that she’s been invited by the Journal of Library Administration to serve on its editorial board and to write a quarterly column. The journal has historically been limited to administration in academic and specialty libraries, but the new editor and review board wanted to add a public library administrator’s voice to the publication. “I’ve been invited to be that voice, and I’ve accepted,” Parker said.

Items raised during public commentary on Sept. 16 related to a Freedom of Information Act request regarding the 2012 library bond campaign, as well as a plea to renovate the front entrance of the downtown library “from bunker chic to pedestrian friendly.” A topic mentioned at the AADL board’s Aug. 19, 2013 meeting was replacement of the front doors to the downtown library, and possibly undertaking broader renovations at the entrance. [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]

Late-Night Bitter Politics Set Stage for May 6

The Ann Arbor city council meeting that started on Monday evening, April 15, 2013 did not end until after 3 a.m. the following day. This was due in part to a stream of about 100 citizens who took the podium for general public commentary and two significant public hearings. The three-minute allocation of time per speaker translated into about five hours of public speaking time.

Mayor John Hieftje

Mayor John Hieftje at the April 15 Ann Arbor city council meeting. (Photos by the writer.)

Conversation amongst audience members at the meeting – as well as subsequently in the community – described the effort as a “citizens filibuster.” The result of all the commentary: Two significant items on the agenda were postponed until the council’s May 6 meeting.

One of those items was the site plan approval for 413 E. Huron. Postponement of a decision on that project was lumped in with the general motion to postpone all remaining action items on the agenda until May 6. It was not necessarily expected that the council would postpone the 413 E. Huron site plan that evening, even if it was hoped by opponents that councilmembers would put off the decision – for a third time.

But there was a reasonable expectation that another significant item would be postponed – the council’s final action on a proposed revision to the city ordinance governing the Ann Arbor Downtown Development Authority. It was during the often acrimonious debate on that decision that the council ultimately opted to postpone all of its remaining action items until May 6.

The acrimony stemmed in part from the fact that the stated intention of Stephen Kunselman (Ward 3) at the start of the meeting was to postpone a final decision – and that was the expected outcome. The fact that this expected outcome was called into question heightened the tension in an already emotional debate. The tension was heightened by the fact that deviation from the anticipated postponement was made possible mainly by the absence of two councilmembers – Marcia Higgins (Ward 4) and Sumi Kailasapathy (Ward 1).

By the time the council reached the DDA ordinance on its agenda, the hour was approaching 2 a.m. And by then Higgins and Kailasapathy had needed to leave the council meeting. Both of them had supported the ordinance changes in the 7-3 vote taken at the council’s April 1, 2013 meeting. But for the final reading on April 15, neither of them were at the table when the debate on the DDA ordinance began.

Kailasapathy described herself to The Chronicle as on the verge of physical exhaustion when she left – having had little sleep over the several days leading up to the meeting. She earns her livelihood as a certified public accountant, and tax season is a time of peak workload.

So apparently recognizing that the absence of Kailasapathy and Higgins would mean defeat for the ordinance change – if it were voted up or down, instead of being postponed – mayor John Hieftje led an effort to force an up-or-down vote on the issue. And councilmembers who were willing to put off the issue were not unified in their view about the parliamentary procedure to use to achieve that delay. So the council voted on two different options – postponing until a date certain (June 17) or tabling the issue. Sabra Briere (Ward 1) provided a crucial vote against postponement, but voted in favor of tabling.

Kunselman argued for the postponement by pointing out that because the sequence of the roll-call vote that evening allowed him to vote last, he could simply assess how the tally stood, and vote accordingly with the prevailing side. That would give him the right to bring back the vote for reconsideration at the council’s subsequent meeting. But Kunselman’s argument was not persuasive to a six-vote majority.

Without a six-vote majority in favor of either tabling or postponing, the council was left to deliberate on the actual ordinance amendments. As some attempted amendments failed – clearly due to the dynamic that had resulted from the absence of two councilmembers – Chuck Warpehoski (Ward 5) eventually proposed adjourning the meeting until the following Monday, when the meeting could continue. However, after a brief recess it was decided that the council would simply postpone all remaining voting items until its May 6 meeting, and put an end to the April 15 meeting.

After approving the motion to postpone the action items, councilmembers ticked through the remaining “housekeeping” items on the agenda, which largely included various reports and communications. Of those, one highlight worth noting was the nomination by Hieftje of Eric Mahler to replace David Nacht on the board of the Ann Arbor Transportation Authority.

The public commentary at the April 15 meeting exceeds The Chronicle’s capacity to report in its customary way. Still, some accounting of the meeting is important for the archives.

This report provides: (1) a summary of votes taken; and (2) a summary of actions that will now appear on the May 6 agenda as a result of the April 15 postponement. In addition, this report begins with details of the deliberations on the proposed DDA ordinance revisions. [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]

Column: A TIF with A2Y Chamber

At its April 15, 2013 meeting, the Ann Arbor city council likely will take a final vote on changes to the local ordinance governing the Ann Arbor Downtown Development Authority. On April 1, by a 7-3 vote, the council gave initial approval to the changes.

A2Y Chamber Member Directory

Cover of the A2Y Chamber member directory. The Ann Arbor Chronicle is among the members listed.

In the interim, the city council has undoubtedly received communications lobbying for and against these changes. Among those communications was a letter sent on April 12 – with signatures from representatives of eight different entities that have significant specific interests in downtown Ann Arbor: “We write to oppose the proposed ordinance amendment … [P]aramount is the proposed change to the current ordinance procedure for calculating potential rebates of higher than anticipated TIF revenues back to taxing units …”

One of the eight signatories is unique – for two reasons.

First, the Ann Arbor/Ypsilanti Regional Chamber is the only one of which The Ann Arbor Chronicle is a member.

Second, the chamber is unique among the eight because it’s the one that has the legal and public policy resources to arrive at a position based on the legal and public policy merits of the issue. But in this case, the chamber has chosen a view that seems only half-informed by legal and public policy analysis.

With access to legal talent like Doug McClure, a recent candidate for 22nd Circuit Court judge who is chair of the chamber’s public policy committee, I’d expect this regional chamber to support the kind of clear, solid, forward-looking legal foundation that the proposed ordinance amendments would provide for us as a regional community. That’s especially true given that so many people – for and against the ordinance changes – agree that the current ordinance language lacks clarity.

And the idea that the chamber would support whatever interpretation the DDA chooses to give the ordinance – in the DDA’s sole judgment, with millions of regional tax dollars at stake – is bizarre from a public policy point of view. It’s especially bizarre given that this purportedly regional chamber has access to regional public policy talent like Andy LaBarre. He’s the chamber’s vice president of government relations who’s a former staffer for Congressman John Dingell. LaBarre is also an elected representative serving on a regional governing body that has tax dollars at stake in this debate – the Washtenaw County board of commissioners.

But the chamber chose to glance past the legal and public policy issues, opting instead to allow personal, petty mayoral politics to cloud its collective thinking.

What’s even more incredible is that the chamber has chosen wording for its letter – which it then recruited the other entities to sign – that would actually point an alert reader to the relevant legal and public policy issues. If the chamber itself had taken the words in its own letter more seriously, perhaps that would have guided the organization to take a position in favor of the ordinance changes.

In this column, I’ll lay out an analysis of the wording that the chamber has chosen – “… which the DDA calculates using its judgment within the standards set by the ordinance” – and explain why those words point the way to supporting the ordinance changes. [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]

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]

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]

DDA Letter: “No funds should be returned…”

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

Earlier this year, in May – after city of Ann Arbor staff pointed out a provision in Chapter 7 … [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]

To Be Continued: Ann Arbor Council

The gathering of Ann Arbor city council members tonight – May 23 – counts not as a separate meeting, but rather as a continuation of the same meeting the council began on May 16. Because of issues that could remain unresolved, councilmembers are likely to recess tonight’s meeting as well, to be continued on Tuesday, May 31 – after the Memorial Day holiday.

This is a preview of the council’s continued meeting, which starts at 7 p.m. in council chambers at city hall. Topics that council might address include excess TIF (tax increment finance) capture in the Ann Arbor Downtown Development Authority district, a new parking contract with the DDA, and possible amendments to the FY 2012 budget. Factors that might play a role in council’s deliberations include alternative calculations of the excess TIF capture, and issues of control regarding components of the proposed parking contract – such as giving the DDA sole authority to set parking rates. [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]

DDA Delays Parking Vote Amid TIF Questions

Ann Arbor Downtown Development Authority board meeting (May 2, 2011): At its Monday meeting, the DDA board was expected to ratify its side of a new contract under which the DDA would continue to operate the city of Ann Arbor’s public parking system.

John Hieftje Roger Hewitt

Mayor John Hieftje (left) and DDA board member Roger Hewitt (right) head to their seats to start the DDA's board meeting. (Photos by the writer.)

Instead, the board received this news from the chair of its bricks and money committee: The city has raised the possibility that the DDA might need to return money to various taxing entities – including the city of Ann Arbor – from the taxes captured through the DDA’s tax increment finance district. The city communicated its concern to the DDA on Monday morning, the day of the noon meeting.

The issue concerns the DDA’s TIF plan, which was renewed in 2003, and language in the city’s ordinance establishing the DDA under the state’s enabling legislation. The TIF plan contains projections for the growth in taxable value of property (both real and personal) in the district. The city’s ordinance stipulates that if the actual “captured assessed valuation” grows at a rate faster than the expectation expressed in the TIF plan, then at least 50% of the additional amount must be returned proportionately to the taxing authorities from which the taxes were captured.

The vagueness of the ordinance language leaves several open questions that will require further review by the city attorney’s office and the DDA’s own legal counsel, as well as the financial staff from both organizations.

Those questions include: (1) What’s the relevant time period? (2) Which set of TIF plan estimates are applicable – the one labeled pessimistic, optimistic or realistic? (3) Who is the responsible party for adherence to the ordinance? (4) Does the ordinance language refer to real property only or also to personal property? (5) Do payments already made by the DDA to the city of Ann Arbor out of the TIF for the new municipal center count towards any sum that might need to be returned?

After hearing the news, the board decided to table the resolution on its agenda that would have ratified the DDA’s side of a new parking contract under which it would continue to manage the city’s parking system. [Previous Chronicle coverage: "Column: Ann Arbor Parking – Share THIS!"]

Board members recognized that it would likely be necessary to convene a special meeting of the board, given the city’s need to approve its budget on May 16. Later the same day, on the evening of May 2, the city council struck from its agenda the item that would have ratified the city’s side of the new parking contract. The city council has not yet weighed in on the text of the contract, but did express its view on the financial terms at its April 19 meeting.

As DDA board members absorbed the news about the TIF question, they heard their usual set of reports from their committees and wrapped up the meeting is less than an hour – they had no further business to transact. Board member Russ Collins, who was prepared to call in to the meeting from Detroit, where he’d been summoned for federal jury duty, did not need to do that.  [Full Story]

DDA Delays Parking Contract Vote

At its May 2, 2011 meeting, the Ann Arbor Downtown Development Authority board delayed voting on the new parking contract under which the DDA would continue to operate the city’s public parking system.

An issue identified by the city of Ann Arbor late Friday raised questions about whether some of the tax increment financing (TIF) revenue captured since 2002 by the DDA should, in fact, be returned to the taxing authorities from which it was collected. So the board wanted additional time to clarify the issue before voting on the contract.

Added information after original publication: [At issue is the proper interpretation of the following paragraph of the city's ordinance establishing the DDA: "If the captured assessed valuation derived from new construction, and increase in value of property newly constructed or existing property improved subsequent thereto, grows at a rate faster than that anticipated in the tax increment plan, at least 50% of such additional amounts shall be divided among the taxing units in relation to their proportion of the current tax levies. If the captured assessed valuation derived from new construction grows at a rate of over twice that anticipated in the plan, all of such excess amounts over twice that anticipated shall be divided among the taxing units. Only after approval of the governmental units may these restrictions be removed."] [.pdf of Ann Arbor city ordinance establishing DDA]

The resolution to ratify the contract with the city was tabled by the board, and board members recognized that it would likely be necessary to convene a special meeting of the board, given the city’s need to approve its budget on May 16. [Previous Chronicle coverage: "Column: Ann Arbor Parking – Share THIS!"]

This brief was filed from the DDA offices at 150 S. Fifth Ave., where the board meets. A more detailed report will follow: [link] [Full Story]

Parking Money for City Budget Still Unclear

On Jan. 5, the Ann Arbor Downtown Development Authority board held a retreat to discuss current negotiations with the city of Ann Arbor about the agreement under which the DDA manages the city’s parking system. And this past Monday, the respective “mutually beneficial” committees of the city council and the DDA board met to continue their conversation on the parking contract – a dialogue that has taken place in public view since June 2010.

Newcombe Clark, Sabra Briere

Left to right: Teddy Bear (on screen); DDA board member Newcombe Clark; Ward 1 city council representative Sabra Briere. Clark and Briere were chatting during the break between the regular DDA board meeting and the DDA board retreat. Briere did not take part in the meetings – she was there as a member of the public. The teddy bear was featured in a video short that was meant to kick off the retreat with a bit of humor. (Photos by the writer.)

Two days later, at Wednesday’s meeting of the DDA partnerships committee, board member Gary Boren reported back to his colleagues about the conversation that had taken place at Monday’s mutually beneficial committee meeting. Boren was frank in his assessment that the city’s team appeared intransigent.

To Boren, it appeared that city representatives had staked out their position, and they saw anything less than that position as meaning the city was not receiving what it is properly owed. For his part, Boren considers the DDA to be in the driver’s seat, because the current contract runs through 2015, and would not require the additional payments the city is seeking for that period.

At the partnerships committee meeting, Susan Pollay – executive director of the DDA – drew attention to the fact that there will be an increasing sense of urgency to firm up the contract as both the city and the DDA put together their respective budgets for the next fiscal year. The city administrator will need firm numbers by March, she suggested.

In this report, we put Boren’s comments and the ensuing discussion by the DDA’s partnerships committee in the context of the DDA’s board retreat last week, when board chair Joan Lowenstein noted, “We’re not a savings bank. We’re supposed to spend money.”

The retreat included a discussion of the kinds of projects the DDA would like to undertake over the next 10 years, some of which would need to be deferred, depending on the amount of parking revenue the DDA passes through to the city. The DDA also appears ready to defer some of its scheduled maintenance to the parking decks, if the maintenance activity is of a more aesthetic or cosmetic nature.

It emerged during the retreat that the politics of parking contract negotiations include the city’s ability to fund public safety – firefighters and police. The speculation was floated at the retreat that it might actually help the city’s negotiating stance with its labor unions, if the DDA took a firmer approach to the parking contract. [Full Story]

Ann Arbor District Library Gets Clean Audit

Ann Arbor District Library board meeting (Nov. 15, 2010): Two financial issues drew much of the focus at Monday’s AADL board meeting.

Dave Fisher

Dave Fisher of the accounting firm Rehmann Robson delivered highlights of the Ann Arbor District Library's financial audit at the AADL board's Nov. 15 meeting. (Photo by the writer.)

Dave Fisher of the accounting firm Rehmann Robson was on hand to review the district’s financial audit for the fiscal year that ended June 30, 2010. He described the library as in solid financial shape, especially in relationship to other entities in Michigan that rely on property tax revenues. The library has no long-term debt and its fund balance is strong, he said. But he added a cautionary note that like other taxpayer-funded entities, the library would likely be grappling with a continued drop in property tax revenues in future years.

Property tax revenues emerged again in a discussion during the director’s report. AADL director Josie Parker drew attention to a Nov. 15 column published in The Ann Arbor Chronicle regarding the ongoing negotiations between the city of Ann Arbor and the Downtown Development Authority. The column pointed out an issue that Parker has been tracking as well: the potential for tax increment financing funds captured by the DDA from public entities, including the AADL, to be used to offset a parking fund deficit caused by striking a new parking deal with the city. The board ultimately passed a resolution at Monday’s meeting, directing Parker to seek legal counsel on the issue.

Board member Ed Surovell said he wanted to make sure the board was defending their right to collect taxes, and that they’re being as responsible as possible to the citizens of the district. “I think this is dead serious business,” he said. “The appropriation and misappropriation of tax revenues is the lifeblood not just of this library, but of a democracy.”

Also during her director’s report, Parker described the results of a site review by staff of the Michigan Commission for the Blind, which manages the federal program that the Washtenaw Library for the Blind and Physically Disabled @ AADL is part of. The review, conducted every two years, is the first one since the AADL took over management of the WLBPD from the county, a transition that occurred in early 2009. AADL received several commendations for its approach to providing WLBPD services.

At the end of the meeting, outgoing board member Carola Stearns – who lost her seat in the Nov. 2 election to challenger Nancy Kaplan – gave a poignant speech, thanking the library staff and her colleagues on the board. In connection with a possible downtown building project, she urged the board to explore alternative funding sources, beyond paying for the project solely with taxpayer funds. [Full Story]

Column: Impact of DDA-City Parking Deal

Just before their Thursday post-election meeting on Nov. 4, Ann Arbor city councilmembers heard a work session presentation from the Ann Arbor Downtown Development Authority. The hour-long work session covered the DDA’s proposal for a process to develop city-owned downtown surface parking lots. It’s a process in which the DDA would play a leading role. The DDA’s proposal has evolved in the course of ongoing discussions between the city and the DDA since early summer.

The DDA will make  another work session presentation before the city council’s meeting on Monday, Nov. 15 – this one about the parking contract under which the DDA uses city-owned assets like decks, lots, and streets to manage the city’s parking system. The current $10-million contract runs through 2015. But the DDA has already paid the city $12 million on that contract, and the city wants an even better deal. Although it won’t be part of the parking contract language, the DDA sees the ability to take more leadership in the development of city-owned surface lots as part of the benefit it would get from a renegotiated parking deal with the city.

For the city, the parking deal is crucial for its budget planning for FY 2012. Already at its mid-October meeting, some city councilmembers began to raise questions about projections for FY 2012. The council must approve the FY 2012 budget this coming May. [The city's fiscal year begins on July 1 each year – the current budget year is FY 2011.] This past May, the city’s projected budget deficit for FY 2012 was $5 million, which already assumed an additional $2 million payment from the DDA.

There are likely enough votes on the 12-member DDA board to approve the new deal. And based on the most recent city-DDA discussions, the new arrangement is likely to take the form of a percentage-of-gross arrangement – 17.5% of gross parking revenues would be paid to the city.

But here’s a different way to describe the arrangement: The city of Ann Arbor would impose a 17.5% parking tax on downtown motorists. That is, downtown parking patrons will pay exactly 17.5% more to park than is actually required for the public parking system to sustain itself, in order that general fund revenues for the city of Ann Arbor can be supplemented.

And to derive support for the city of Ann Arbor general fund from the parking system, the DDA’s parking fund will operate at a greater deficit for the next few years than it would if the city honored the current parking contract. During that period, the DDA’s tax increment finance revenues – the amount it captures from other taxing authorities besides the city of Ann Arbor – will need to remain uninvested on behalf of the broader community. The unspent TIF fund balance will be able to offset the parking fund deficit, leaving the DDA still solvent, but barely so.

Two important questions have been ignored in the course of the city-DDA negotiations: (1) Is it appropriate to use non-city TIF funds – from the county, Ann Arbor District Library, Washtenaw Community College and Ann Arbor Transportation Authority – to offset the parking fund deficit caused by striking a new parking deal with the city? and (2) If the city’s public parking system generates more revenue than is required to operate and maintain it, what investment of that excess revenue would yield the greatest and best return for the community? [Full Story]