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Posted on Tue, May 10, 2011 : 5:59 a.m.

Unresolved issues with DDA could make it hard to finish work on Ann Arbor city budget, mayor says

By Ryan J. Stanton

The city of Ann Arbor's budget situation grew more complicated Monday night, with Mayor John Hieftje saying it's going to be difficult to finalize it this month.

It's been expected the Ann Arbor City Council would adopt the budget for the next two fiscal years next Monday, but Hieftje told council members they should keep the Friday before Memorial Day weekend open in case a late special meeting is needed.

"This is a situation I think we may be in," he said, adding there remain "some unknowns" regarding the financial picture for the fiscal year starting July 1, including the lack of an approved parking agreement with the Downtown Development Authority.


John Hieftje

Ryan J. Stanton |

The city and DDA have been in talks about a new parking agreement for the last year. A deal was in the works to have the DDA share about 17 percent of downtown parking revenues with the city through 2033, but the vote was delayed last week when DDA officials learned they may have to brace for a major unexpected cash payout.

Tom Crawford, Ann Arbor's chief financial officer, provided an update Monday night in which he said about $750,000 to $800,000 in tax revenues expected to be collected by the DDA next fiscal year may need to be refunded to the taxing bodies from which they came.

"Of that, about $450,000 or so would be toward the city itself," Crawford told council members.

Crawford said that's on top of $2.5 million the DDA potentially owes entities like the city of Ann Arbor, Washtenaw County, the Ann Arbor Transportation Authority, the Ann Arbor District Library and Washtenaw Community College going back to 2004.

The DDA is partially funded through tax-increment financing revenue, meaning it captures the increase in taxes that result from new construction and improvements downtown.

DDA officials learned last week the authority may have collected more TIF revenue than it should have been allowed to keep in recent years.

DDA and city officials still are working on interpreting a forgotten section of the city code from 1982. But basically it states that if TIF revenue grows faster than expected and hits certain targets, the DDA is supposed to kick back excess money to taxing jurisdictions.

The DDA's TIF income has grown substantially since 2002 due to new developments downtown. It's nearly $4 million annually, up from less than $2.9 million in 2002.

Hieftje said it's possible the DDA could call a special meeting before the City Council votes on its budget next Monday, but it's unlikely everything is going to be resolved by then.

Under the city charter, the City Council is supposed to adopt the city budget no later than its second meeting in May.

Hieftje acknowledged having to call a special meeting at the end of this month to tie up loose ends with the budget could disrupt some people's vacation plans.

"And who knows, maybe we'll get to the end of the month and we won't be able to finish it, but we'll do our best," he said.

Ryan J. Stanton covers government and politics for Reach him at or 734-623-2529. You also can follow him on Twitter or subscribe to's e-mail newsletters.



Wed, May 11, 2011 : 4:55 a.m.

The DDA was created because there were fiscal management problems, now do have to create another agency to solve the fiscal management problems? Let's start peeling back the layers of incompetence in government and start holding folks accountable for their performance....that doesn't happen with an unelected, unaccountable agency like the DDA. When does it end? Who you gonna recall?


Tue, May 10, 2011 : 8:37 p.m.

Why did it take this many years (2004) to figure out the DDA was getting too much money? Who audits their take (apparently themselves)? Should not the city, county, aata, library and wcc have known? Why weren't their treasurers paying attention?


Thu, May 12, 2011 : 12:23 p.m.

How could the City have known. It is not like the Mayor sits on the DDA board. Oh, wait....

Edward R Murrow's Ghost

Tue, May 10, 2011 : 1:28 p.m.

There's an easy solution to this: dissolve the unelected and unaccountable DDA. Good Night and Good Luck


Thu, May 12, 2011 : 12:22 p.m.

C- on math. A+ on critical analysis.

Edward R Murrow's Ghost

Tue, May 10, 2011 : 9:55 p.m.

I obviously need a remedial math class. The parking surplus is $8.7 million, not $7.3 million. Which means the DDA had $12.5 million to play with after it "captured" taxes from other authorities. And yet it is running a $5.7 million deficit this year, BEFORE it pays back the $2 million it owes for having "captured" too much tax revenue. Good Night and Good Luck

Edward R Murrow's Ghost

Tue, May 10, 2011 : 4:40 p.m.

Per the 2010-11 DDA budget (<a href="" rel='nofollow'></a>: Parking Revenue = $16 million Parking expenses (e.g. upkeep) = $7.3 million So the DDA had a $7.3 million surplus to play with from parking revenues. Add to that the nearly $3.8 million it receives in &quot;tax capture&quot; and it had nearly $11 million to play with this year. AND YET the DDA projects a $5.7 million deficit on a $25 million budget. And that was BEFORE it was discovered that it owed local taxing authorities roughly $2 million. The DDA not only is unelected and unaccountable, it appears to be incompetent, much more so than the elected city government. And, unlike the city government, the DDA gets to keep on doin' what it's doin' whether or not we support it--its members are not elected to serve on it (yes, the mayor serves on the DDA--one vote on a 12-member board. Seven votes on that board go to downtown businesspersons. They effectively own the board and, thereby, OUR money). Time to dissolve it. Good Night and Good Luck


Tue, May 10, 2011 : 4:17 p.m.

If they do they say good bye to the money they were getting from the WISD and I think there are other sources they lose too. The city would then have to actually manage the parking structures and get the maintenance performed. The couldn't do that in the first place. Maybe you get rid of the council, mayor, city manager and let the DDA run the city and see if they can do a better job.


Tue, May 10, 2011 : 12:35 p.m.

I have one basic question. Why did the City turn over the money making &quot;Parking System&quot; to the DDA in the first place?


Thu, May 12, 2011 : 12:20 p.m.

To avoid the responsibility for its collection and subsequent misuse. Duh.


Tue, May 10, 2011 : 12:07 p.m.

Disrupt vacation plans?


Thu, May 12, 2011 : 12:19 p.m.

The horror. The horror.


Tue, May 10, 2011 : 11:56 a.m.

So, why not make it easier? DDA pays owed entities their rightful revenues . . . except for the City of Ann Arbor. The city already received its money . . . in accelerated annual payments from the DDA over the past several years. Any future payment from the DDA to the city should be net of the &quot;new-found&quot; liability amount.


Tue, May 10, 2011 : 10:44 a.m.

One very easy way to cut the budget and fill the buckets would be to close down DDA. Hire responsible folks to run city hall and get rid of administrative baggage.

Alan Goldsmith

Tue, May 10, 2011 : 10:16 a.m.

&quot;The city of Ann Arbor's budget situation grew more complicated Monday night, with Mayor John Hieftje saying it's going to be difficult to finalize it this month.&quot; Surprise. Anyone can manage when times are good but poor leaders are always failures when there are difficult challenges. Meet Ann Arbor's Mayor for the last ten years, John Hieftje. Next thing you know he'll be calling Lansing for an emergency city manager. Lol.


Thu, May 12, 2011 : 12:18 p.m.

This is not as far-fetched as it sounds. Under the new law the City 'administration' could call for an EFM if it cannot resolve the budget. This would allow the EFM to cancel and re-write union contracts and cancel spending on art and other sacred cows that poloiticans do not have the will to cut. The pols could then run for re-election with a balenced City budget and rightfully claim that they hadn't broken promises. It was the evil governor and his new director of this program (Roger Fraser) who did it. But they have to fail to meet budget to do this.