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Ann Arbor DDA forwards FY 2027 budget to city council as TIF revenue-share shifts
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Summary
The Ann Arbor Downtown Development Authority voted to forward its proposed FY 2027 budget to city council on March 25, approving a package that reflects a transition to a 70/30 revenue-share model, park-system projections and new grant revenue; council will consider the DDA plan April 20.
The Ann Arbor Downtown Development Authority voted March 25 to forward its proposed FY 2027 budget to city council, completing a board vote to send the plan into the city’s budget process.
Sarah, the DDA staff member who presented the budget, told the board the proposal reflects an upcoming shift in the DDA’s revenue model under the new development plan. "In 2027, the first year under the new plan ... we'll split the total capture in the 70, 30 proration," she said, calling for 70% retention by the DDA and 30% returned to taxing units.
Why it matters: the change is intended to smooth revenue swings among taxing units and the DDA. Sarah said the DDA retained roughly $9,600,000 in the under-cap portion in 2026, while amounts distributed to taxing units above the cap were "just under $4,000,000." She said the original district’s captured value is about $469 million and that the expansion district represents a much smaller share of revenue.
The presentation included a breakdown across the DDA’s TIF and parking systems. Notable points: the DDA budget anticipates about $1,000,000 in additional grant revenue across FY 2026–27; the DDA is budgeting roughly $1,000,000 per year for its service/operations team; projected parking-system revenues are expected to increase about 6% year-over-year for 2026 and again for 2027; and the city parking agreement requires the DDA to remit 20% of parking revenues to the city's general fund, which the presenter estimated at roughly $5.4 million in 2027.
Board members asked about parking assumptions and the next parking-rate study. Board member Milton Dehoney said the earlier study offered three pathways and criticized what he called a "false narrative" that higher parking fees would hurt downtown business; he urged considering a more aggressive rate path to capture revenue for reinvestment. Sarah said the board previously set multiyear rates and that a third-party study offers outside validation; she added that setting rates in-house was possible but that third-party reviews have provided useful assurance.
Miss Thompson, the DDA executive director, reminded the board that council will consider the DDA’s development (TIF) plan on April 20 and that the opt-out deadline for taxing units is April 3. She reported that the Ann Arbor District Library will opt out of both the original and expanded district and noted the county voted to opt out of the expanded area; those opt-outs were accounted for in the budget presentation.
The board moved and seconded a resolution to forward the FY 2027 budget to city council and approved it by voice vote. The chair said the city council presentation will be April 20 and that the DDA will return to adopt a final budget after the city's process, expected in June.
Details and next steps: the budget as presented is being transmitted in the city's budget format; the DDA will continue to refine capital project allocations once the TIF plan is finalized. The board also discussed an ongoing GoPass pilot with AAATA for Dunbar Tower residents and the possibility of expanding the program tied to future developments such as 350 South Fifth.
