"What is the Ann Arbor/Ypsilanti SmartZone?"
In 2001, the Michigan Economic Development Corporation (MEDC) created eleven separate SmartZones throughout the state, including Ann Arbor/Ypsilanti. The purpose of the Ann Arbor/Ypsilanti SmartZone is to provide capital needed for the facilitation of the commercialization of research products being developed at University of Michigan and Eastern Michigan University and the development of private high technology enterprises that, but for this organization, would be deferred, or located outside of the SmartZone area.
The foundational documents for the Ann Arbor/Ypsilanti SmartZone included 1.) An initial SmartZone application to the MEDC, 2.) A Tax Increment Financing plan, and 3.) A Municipal Cooperation Agreement between the cities of Ann Arbor and Ypsilanti.
The governing body, known as the Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority (LDFA) consists of a nine-member board of directors of which six members are appointed by the Ann Arbor City Council and three members are appointed by the Ypsilanti City Council. The LDFA operates under a set of bylaws that were initially approved by the Ann Arbor and Ypsilanti City Councils. Proposed changes or amendments to the bylaws are adopted by the LDFA's Board of Directors and submitted to the Ann Arbor City and Ypsilanti City Councils for approval.
The LDFA’s primary source of revenue comes from the use of a tax capture district authorized under State law. The geographic boundaries for the Ann Arbor/Ypsilanti Smartzone LDFA tax capture district are defined as the combined DDAs of the two respective cities. The Smartzone can capture one-half of the school operating and state education taxes within the tax capture district. Presently, tax capture revenue is collected only within the geographic boundaries of the Ann Arbor DDA since the portion in the Ypsilanti DDA is being used for other purposes. The tax capture is based on the increase in taxable value due to new development and appreciation above the base year of 2002. Each year the Ann Arbor Treasurer collects taxes in the DDA area and distributes them to each taxing entity with the exception of the portion of the above two millages which are distributed to the LDFA per the approved TIF capture plan. The Treasurer then submits to the State the amount captured and transferred to the LDFA and the State reimburses those entities for the funds utilized by the LDFA. The net impact is the tax capture funds distributed to the LDFA are State funds that would otherwise not have been utilized in this community absent the LDFA.
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