The Washtenaw County Board of Commissioners voted on March 19 to exempt county taxes from the Ann Arbor Downtown Development Authority's expansion area, using the opt-out mechanism created by Michigan Public Act 57 of 2018. The Ann Arbor DDA is one of the best-managed DDAs in Michigan and, by most measures, in the country. This is not a performance dispute. It is a governance dispute — a county board asserting that investment decisions involving public tax dollars should be made by elected bodies answerable to voters, not by appointed boards accountable only to the municipality that created them.

The accountability argument is not new. It has been available to counties in Michigan since PA 57 of 2018 created the opt-out mechanism specifically to address county concerns about TIF districts capturing county levy revenue. What is new is that Washtenaw County has now used it, against a DDA widely regarded as a model of effective management. That matters for every Michigan TIF district manager.

How Michigan PA 57 Works

Public Act 57 of 2018 was a significant piece of TIF reform legislation. Among its provisions, it created an explicit mechanism for counties, townships, and other taxing jurisdictions to exempt their millage from capture by TIF districts, including DDAs. The opt-out process requires affirmative action by the taxing jurisdiction's governing body — it does not happen automatically. But once the opt-out is exercised, the exempted millage is no longer captured by the TIF district's plan.

The Washtenaw County action applies specifically to Ann Arbor DDA's expansion area — a geographic expansion of the existing DDA boundary that would have captured county tax increment in the newly included parcels. The existing DDA district and its existing TIF plan are unaffected by this vote. But the expansion area will proceed without county TIF capture, meaning the total revenue available to fund DDA activities in the expansion zone is reduced.

The county's stated rationale reflects the accountability argument: TIF capture redirects tax dollars from the county's general fund to the DDA's plan, reducing the resources available for county services. The county board believes it should control how county tax revenue is invested, rather than having those investment decisions made by a DDA board appointed by the city council.

Why This Matters Even If Your DDA Is Excellent

The Washtenaw opt-out is a warning for every Michigan DDA with county levy capture, regardless of operational quality. The Ann Arbor DDA's performance record did not protect it from the opt-out. The argument the county made is structural — it is about who makes decisions, not about whether the decisions are good. A DDA that has excellent outcomes can still lose county levy capture if the county board decides that the accountability argument outweighs the performance argument.

This has several practical implications for Michigan DDA managers:

Understand your county board composition and priorities. Who sits on the county board? What are their priorities? Have they expressed concerns about TIF districts, appointed boards, or redirection of county levy revenue? A county board dominated by fiscal conservatives who prioritize elected accountability is a different risk environment than a board whose members have historically supported downtown investment.

Know what share of your TIF increment comes from county levy. Not all TIF districts capture the same mix of taxing jurisdiction revenue. If county millage represents 40% of your TIF increment, an opt-out is a 40% revenue reduction. If county millage represents 15%, it is a 15% reduction. The materiality of the risk depends on the composition of your increment.

Document your relationship with county officials. The Washtenaw case is partly a relationship failure — the county board should have been a continuous stakeholder in Ann Arbor DDA's planning conversations, not an occasional audience for presentations. DDAs that have county commissioners serving on their boards or advisory committees, that invite county officials to their major planning sessions, and that regularly share performance data with county leadership are harder to opt out of than DDAs that operate as city-centric institutions with limited county engagement.

The Accountability Argument Is Getting Stronger

The accountability critique of appointed special districts is not going away. It is getting more sophisticated and more actionable, particularly in states where TIF reform legislation has created explicit opt-out mechanisms. The argument that elected bodies should control investment decisions with public tax dollars resonates in the current political environment, where scrutiny of appointed boards and special districts is increasing across the country.

The best response is not to argue against accountability — that is a losing argument in the current climate. The best response is to demonstrate that the DDA's appointed board is accountable through mechanisms other than direct election: transparent reporting, public meeting requirements, clear performance benchmarks, and regular reporting to the elected city council that appointed the board. Making that case proactively to county officials, rather than reactively after an opt-out vote, is the strategic difference.

Key Takeaways

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