After the University’s recent land grabs, Ann Arbor city officials are looking to strike a compromise for future land purchases given the University’s tax-exempt status and the effects it may have on the city’s economic development.

Ann Arbor Mayor John Hieftje said while the city has been very cooperative with the University’s purchase of tax-exempt properties, he believes the problem has become too important to ignore any longer.

“We’ve really stepped up our cooperation around economic development in the last 10 years,” Hieftje said. “It is kind of an inevitable outcome if the University continues to buy property in the city and that is that the city will be less able to provide services.”

Hieftje said the city is willing to make compromises with the University to solve the land use issues, and would like to engage in conversation with University administrators.

They aim for “a policy that will govern these issues and that would ensure that the city would not see continually diminishing revenues from the University’s land purchases,” Hieftje said.

Hieftje added that he and Councilmember Sally Hart Petersen (D–Ward 2) have been working on a proposal to ease the issue. While he would not specify what the proposal will entail, Hieftje said he and Petersen would be “putting it into a formal request” in about a month.

Councilmember Christopher Taylor (D–Ward 3) said even though the University is vital to the city’s economy, he advocates a settlement on standards that would stop the city’s increasing revenue losses.

“There is no question that the University is the primary economic driver in the city and the region, and that the University’s growth is important to the city,” Taylor said. “That said, the University’s growth in the city clearly reduces the tax base and reduces the city’s ability to provide services to its residents and the University, and it’s my hope a reasonable accommodation will be made.”

Jim Kosteva, the University’s director of community relations, said the conflict over the University’s tax-exempt status resurfaces every four-to-six years in a “cyclical nature,” often after the University purchases a cluster of properties.

“Some folks get a little anxious about the properties that are removed from the tax rolls and what the impact (will be),” Kosteva said.

Recently, the University purchased the site of Blimpy Burger and a nearby property for $1.5 million. Since 1999, the University has purchased 29 pieces of land in total around the city. When the University bought the former Pfizer building — now the North Campus Research Complex — in 2009, the city’s revenue from property taxes decreased by 4.8 percent.

According to Kosteva, the University has added 9,000 jobs to Ann Arbor’s economy over the past 10 years. He said the University brings immense value to the city.

“Nevertheless, the University feels convinced that it does add a very substantial value to the community, and that our growth, our expansion, our fulfillment of our public mission does provide a very substantial value,” Kosteva said.

Kosteva added that the University would not necessarily be opposed to a proposal, should one be on the table.

“Our door is always open to our conversations.”

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