A proposal to place new limits on the Ann Arbor Downtown Development Authority, including the amount of taxes it captures, was postponed at Monday night's City Council meeting.
Council Members Sumi Kailasapathy, D-1st Ward, and Stephen Kunselman, D-3rd Ward, are co-sponsoring a set of ordinance changes that now will be taken up April 1.
The changes would bar Ann Arbor's mayor and any other elected officials from serving on the DDA's governing board, place new term limits on DDA board members, and redistribute roughly $1 million a year in future tax revenues from the DDA to different taxing units.
Council Member Stephen Kunselman, D-3rd Ward, said he noticed the DDA's tax capture is projected to grow by nearly $1 million a year due to growth in the downtown tax base and he wants to send that money back to the taxing units.
Ryan J. Stanton | AnnArbor.com
Kunselman said he noticed the DDA's tax capture is projected to grow by nearly $1 million a year due to growth in the downtown tax base and he wants to send that money back to the taxing units.
"The intent of these ordinance amendments are to just bring some stability, some trust and confidence into the DDA as an institution," Kunselman said.
"And as we go through the effort, the DDA's budget is to remain whole is my intent," he added. "We're not trying to hamstring the DDA's ability to pay their bills."
Mayor John Hieftje said he has concerns about what's being proposed, though.
"My concerns about this aren't the financial impact to the DDA," he said. "It's more the financial impact to the city's general fund, which I believe could be negative were we to take this action. I'm sure that will come out as we do further discussion on the numbers."
DDA Executive Director Susan Pollay and DDA board members were in attendance Monday night but did not speak.
The DDA has released a seven-page report on the history and purpose of the DDA, with a detailed look at projects it has financed over the years with the tax dollars it collects.
The report states that even though the city reduced its tax levy over the last decade, the city still received more tax dollars out of the DDA district in 2012 than it did in 2002.
Since the DDA's creation in 1982, the report states, the private sector has invested hundreds of millions of dollars in new downtown developments, business renovations and expansions.
Last year, the building permit valuation of private construction in the 27.41 square miles of Ann Arbor outside of the DDA totaled $77.1 million or $2.8 million per square mile. But inside the DDA, which is 0.42 square miles, the total building permit valuation was $42.3 million, the report states.
The DDA district encompasses all or part of 67 city blocks. Of the $22 million in total taxes paid by property owners in the downtown last year, $3.7 million went to the DDA.
The city ordinance changes being proposed by Kunselman and Kailasapathy state any tax-increment financing or "TIF money" used by the DDA must be specifically allowed under the 1975 state law that created DDAs and must directly benefit properties within the DDA district.
The changes also make it clear the DDA is required to submit an annual TIF report to the city before the first regular meeting of the City Council each January.
Kailasapathy said at Monday night's meeting she's concerned the city's audit committee isn't getting answers to its questions about the DDA's finances.
She pointed out the DDA's latest audit states parking garage bonds are to be serviced with revenues from the DDA's parking fund. But millions of TIF dollars are being used for that.
"We need to discuss this and other financial statement errors with the DDA's auditors to determine whether the auditors need to reissue the DDA's financial statements," she said.
Kailasapathy said members of the audit committee have requested financial information from the DDA that was not provided in a timely manner because its chief financial officer has been sick.
"I'm quite concerned by the fact there's no succession plan to address the issue of a sick CFO," she said. "All these events have only added more questions about the DDA as an institution."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.