On April 24, 2026, the Ann Arbor Downtown Development Authority approved an expansion of its boundary to include the Huron River corridor on the city's northern edge. The expansion follows directly on the heels of Washtenaw County's opt-out of the DDA's TIF capture under Michigan Public Act 57, which Issue 2 of this publication covered in detail. The DDA is therefore simultaneously losing one taxing-jurisdiction's contribution to its TIF capture and adding a new geographic territory whose property base will become part of its capture going forward. The financial geometry is non-obvious. The piece walks through what happened, what it means for the DDA's long-term financial profile, and what it suggests about how a well-managed DDA navigates an environment where one major revenue lever is moving against it.

What the county opt-out did

Michigan Public Act 57 of 2018 codified taxing-jurisdiction opt-out rights from DDA TIF capture. Before PA 57, jurisdictions whose levies were captured by a DDA TIF had limited ability to exit that capture once the TIF was established. After PA 57, jurisdictions can opt out by resolution, with their share of the captured incremental revenue returning to them. Washtenaw County exercised that authority in late 2025, with the opt-out taking effect for the 2026 tax year. The Ann Arbor DDA's TIF capture from county levies, which had been a meaningful share of total annual capture, drops to zero.

The county opt-out does not affect the DDA's capture from the city's own levies, which remain in place under the existing TIF documents. It also does not affect the DDA's capture from the school district levy, which is governed by a different state framework. The opt-out is, in net financial terms, a reduction of approximately 12-18% in projected annual TIF capture from the existing boundary. The number depends on assessment growth assumptions and on whether other local jurisdictions follow the county's lead.

What the boundary expansion did

The April 24 expansion adds the Huron River corridor to the DDA's boundary. The corridor is a strip of property running along the river on the city's northern edge, encompassing several mixed-use developments completed in the past five years and several land parcels in active development. The expansion does not change the DDA's charter or its general powers. It changes the geographic footprint inside which the DDA can capture incremental property tax revenue.

The new property base inside the expansion zone is meaningful. The corridor includes properties whose assessed value has grown substantially since the base year would be set, which means the incremental capture potential is significant. Projected annual TIF capture from the expansion area, once base year is set and assessment growth begins to be captured, is approximately 15-22% of the DDA's pre-county-opt-out capture level.

On a net basis, the boundary expansion roughly offsets the county opt-out. The DDA's projected total annual capture under the expanded boundary, post-county-opt-out, is in the same general range as the projected capture under the prior boundary with full county participation. The internal composition of the capture has changed substantially. The DDA's revenue is now more concentrated geographically, less dependent on county participation, and more sensitive to assessment trends in the new corridor.

Ann Arbor DDA: Boundary Expansion vs. County Opt-Out
Source: Ann Arbor DDA board materials April 2026 · Washtenaw County Board of Commissioners resolution · OpenStreetMap contributors · CartoDB
Ann Arbor DDA: Projected TIF Capture Scenarios FY26-FY32
Source: Ann Arbor DDA financial projections FY26-FY32 · Washtenaw County opt-out analysis

The governance rationale

The DDA's public materials frame the boundary expansion as an independent decision driven by the corridor's development trajectory rather than as a response to the county opt-out. The framing is partially correct. The Huron River corridor has been on the DDA's strategic agenda since 2019. The mixed-use developments inside the corridor would have been candidates for inclusion in a DDA boundary regardless of the county opt-out. The timing, however, is not neutral. The expansion came to a vote in the same six-month window in which the county opt-out took effect. The board's public comments at the April 24 meeting acknowledged the financial offsetting effect.

The governance question is whether a boundary expansion that is timed to offset a revenue loss should be evaluated under the same standards as one that is timed to align with corridor development independently. The answer, in the Ann Arbor case, is that the expansion was on the agenda for governance reasons that pre-dated the county opt-out. The opt-out compressed the timeline and probably influenced the board's appetite to move forward when it did. The result is functionally similar to what would have happened on a slower timeline absent the opt-out.

Why this matters for other Michigan DDAs

PA 57 opt-outs are recurring across Michigan. Washtenaw County's opt-out is the most-watched recent case because Ann Arbor is the most-watched DDA, but other counties have opted out of capture from other DDAs. The county opt-out is structurally the largest revenue risk Michigan DDAs face. The Ann Arbor response, which is to expand the boundary in the same window as the opt-out, is one of the few visibly successful counter-moves a DDA can make.

For DDAs facing or anticipating county opt-outs, the operational question is whether the DDA has corridor-development opportunities ready for boundary expansion, or whether the expansion would have to be invented in response to the opt-out. A DDA whose strategic plan has identified one or more corridor expansions as long-term goals can move on those plans on a compressed timeline when the revenue environment requires it. A DDA without such plans on the shelf has fewer options. The lesson from Ann Arbor is that the planning work that made the April 24 expansion possible was on the books long before the opt-out.

What district managers in other DDAs should be doing now

For Michigan DDAs, the immediate next step is reviewing the strategic plan for any corridor expansion candidates and ensuring that the legal and financial groundwork for any such expansion is current. The boundary expansion process under Michigan law requires city council action plus DDA board action, with public hearings and notice requirements. The procedural calendar can run six to twelve months. A DDA that wants to be in position to move on a boundary expansion within twelve months of a county opt-out needs the planning work in place now.

For DDAs in other states, the Ann Arbor case generalizes to a broader pattern. When a DDA faces a structural revenue risk that is outside its direct control, the responses available to the DDA are: scope reduction, operational efficiency, diversified revenue, and boundary expansion. The Ann Arbor case is the cleanest 2026 example of the boundary-expansion response. Districts that may face structural revenue risks in their own jurisdictions should be prepared to deploy any of the four responses on a compressed timeline. The Arlington BIDs feature in this issue covers the first three responses; the Ann Arbor case rounds out the four.

Key Takeaways

Sources

Editor's note. Direct sequel to "Ann Arbor TIF Opt-Out: The Legal Precedent." The Issue 2 piece covered the opt-out itself. This piece covers the DDA's offsetting boundary expansion.